The TSX-listed Canadian stocks we’ve discovered have seen their unlevered free cash flow grow at an annual rate of at least 35% over the past five years
SmallCapPower | May 3, 2021: Unlevered free cash flow is the free cash flow available to pay all stakeholders in a firm, including debt holders as well as equity holders. Non-cash expenses such as depreciation and amortization are added back to earnings to arrive at the firm’s unlevered free cash flow. It is an important metric for investors, as it is a measure of the amount of cash that a company can use to pay dividends to shareholders and/or to make further investments in growing the company’s business. Today we have identified four TSX-listed Canadian stocks with market caps below $2 billion that have annualized unlevered free cash flow growth over 35% per year over the past five years.
*Share price data and other metrics as of April 30, 2021
Leon’s Furniture Limited (TSX:LNF) – $22.03
Consumer Discretionary – Furniture and Appliances
LFL is the largest retailer of furniture, mattresses, appliances and electronics in Canada. Leon’s Furniture operates several brands of department stores: Leon’s; The Brick; Brick Outlet; and The Brick Mattress Store. Finally, with The Brick’s Mid Northern Appliance banner alongside Leon’s Appliance Canada banner, this makes the Company the country’s largest commercial retailer of appliances to builders, developers, hotels and property management companies. The Company has 304 retail stores from coast to coast in Canada under various banners. Leon’s recently announced that it plans to release its financial results for Q1 2021 on May 13, 2021.
- Market Cap: $1,725.9M
- YTD-Return: +6.8%
- 1-Year Share Price Return: +66.3%
- 30-Day Average Trading Volume: 16,150
- 5-Year Free Cash Flow CAGR: +102.3%
AutoCanada Inc. (TSX:ACQ) – $47.36
Automotive Dealers
AutoCanada is a leading North American multi-location automobile dealership group currently operating 66 franchised dealerships, comprised of 27 brands, in eight provinces in Canada as well as a group in Illinois. AutoCanada currently sells Chrysler, Dodge, Jeep, Ram, FIAT, Alfa Romeo, Chevrolet, GMC, Buick, Cadillac, Ford, Infiniti, Nissan, Hyundai, Subaru, Audi, Volkswagen, Kia, Mazda, Mercedes-Benz, BMW, MINI, Volvo, Toyota, Lincoln, Honda and Porsche branded vehicles. In 2020, ACQ’s dealerships sold approximately 66,000 vehicles and processed over 700,000 service and collision repair orders in its1,098 service bays generating revenue in excess of $3 billion. On April 5, 2021, ACQ announced that it had completed its acquisition of PG Klassic Autobody in BC. PG Klassic Autobody has been in operation for nearly 50 years and has built a reputation as a top-tier collision centre. The acquisition represents a continuation of the Company’s strategy to develop its national collision centre network to match AutoCanada’s dealership network.
- Market Cap: $1,289.5M
- YTD-Return: +100.6%
- 1-Year Share Price Return: +623.1%
- 30-Day Average Trading Volume: 234,210
- 5-Year Free Cash Flow CAGR: +90.1%
Richelieu Hardware Ltd. (TSX:RCH) – $42.94
Consumer Discretionary – Home Construction
Richelieu Hardware is a North American importer, distributor, and manufacturer of specialty hardware and related products. The Company currently has a customer base of kitchen and bathroom cabinetry, storage and closet, home furnishings and office furniture manufacturers, residential and commercial woodworkers, and hardware retailers, such as renovation superstores. Overall, the Company provides 110,000 different items that are designed for its customer base of over 80,000 customers that are served at 72 centers located in North America. On April 8, 2021, RCH reported strong Q1 F2021 financial results. Revenues were up 19.3% over the prior year’s quarter to $297.6M, while earnings before taxes interest amortization and depreciation (EBITDA) was up 53.4% to 38.2M compared with the same quarter of 2020.
- Market Cap: $2,399.1M
- YTD-Return: +30.0%
- 1-Year Share Price Return: +62.4%
- 30-Day Average Trading Volume: 85,260
- 5-Year Free Cash Flow CAGR: +72.5%
The North West Company Inc. (TSX:NWC) – $35.40
Consumer Staples – Grocery
North West Company is a retailer of food and everyday products and services to rural communities and urban neighbourhoods in Canada, Alaska, the South Pacific and the Caribbean. North West operates 250 stores under the trading names Northern, NorthMart, Giant Tiger, Alaska Commercial Company, Cost-U-Less and RiteWay Food Markets and has annualized sales of about $2.4B. The North West Company, one of Canada’s oldest corporations, was founded in 1668 and is headquartered in Winnipeg, Canada.
- Market Cap: $1,715.8M
- YTD-Return: +9.1%
- 1-Year Share Price Return: +34.6%
- 30-Day Average Trading Volume: 129,700
- 5-Year Free Cash Flow CAGR: +38.3%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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