The TSX-listed Canadian stocks we’ve discovered have seen their Return on Equity (ROE) increase by at least 15% cumulatively over the past three years
SmallCapPower | May 10, 2021: Today we return to the fundamentals and examine financially sound investments with a profitable track record. Return on Equity (ROE) is calculated by dividing net income by shareholders’ equity. Shareholders’ equity is a company’s assets with debt subtracted. ROE can be considered as the return on net assets. Many investors use ROE to see how effectively management is utilizing its assets to generate profits. Today we have identified four TSX-listed Canadian stocks that have increased their Return on Equity by at least 15% over the past three years.
*Share prices and other metrics as of May 7, 2021
AirBoss of America Corp. (TSX:BOS) – $41.40
Chemicals
AirBoss of America is a leading and diversified developer, manufacturer, and provider of innovative survivability solutions, advanced custom rubber compounds, and finished rubber products that are designed to outperform in the most challenging environments. Founded in 1989, the Company operates through three divisions. AirBoss Defense Group is a global leader in personal and respiratory protective equipment and technology for the defense, healthcare, medical, and first responder communities. AirBoss Rubber Solutions is a top-tier North American custom rubber compounder with 500 million turn pounds of annual capacity. AirBoss Engineered Products is a supplier of innovative anti-vibration solutions to the North American automotive market and other sectors. On March 31, 2021, AirBoss announced it had received a US$23 million contract to supply extreme cold weather footwear to the US Department of Defense.
- Market Cap: $1,678.0M
- YTD-Return: +6.7%
- 1-Year Share Price Return: +35.3%
- 30-Day Average Trading Volume: 126,780
- Return on Equity (F2020): 35.1%
- Return on Equity (F2017): 5.7%
Hut 8 Mining Corp. (TSX:HUT) – $6.19
Cryptocurrencies
Hut 8 Mining is a Canada-based cryptocurrency miner. Hut 8 wants to become the biggest cryptocurrency miner, by using its BlockBox AC manufactured in partnership with Bitfury to mine Bitcoins using conventional datacenter infrastructure. Hut 8 currently operates a total of 73 BlockBox Data Centers, including 56 BlockBoxes at its facility in CMH, Alberta, with each BlockBox having 1.2 MW of capacity, representing an aggregate of 67.2 MW of maximum operating power capacity. Hut 8 has a total maximum operating power capacity of 85.9 MW and an average actual operating hash rate of over 640 Petahashes per second. On March 31, 2021, Hut 8 announced that it is now working with Luxor Mining and its proprietary technology developed to maximize returns for miners by utilizing a profit-switching algorithm to maximize earnings by switching between blockchains and venues to maximize hashrate rewards and best-price execution. Hut 8 has allocated a portion of its SHA-256 hashrate to Luxor to advance its recently-announced expansion into Ethereum mining.
- Market Cap: $739.8M
- YTD-Return: +77.4%
- 1-Year Share Price Return: +291.8%
- 30-Day Average Trading Volume: 1,582,260
- Return on Equity (F2020): 24.1%
- Return on Equity (F2017): 4.5%
Extendicare Inc. (TSX:EXE) – $7.84
Healthcare – Long Term Care
Extendicare is a leading provider of care and services for seniors across Canada, operating under the Extendicare, Esprit Lifestyle, ParaMed, Extendicare Assist, and SGP Purchasing Partner Network brands. It is committed to delivering quality care throughout the health continuum to meet the needs of a growing seniors population. It operates or provides contract services to a network of 122 long-term care homes and retirement communities (69 owned/53 contract services), providing approximately 8.5 million hours of home healthcare services annually, and providing group purchasing services to third parties representing approximately 79,400 senior residents across Canada.
- Market Cap: $702.2M
- YTD-Return: +18.1%
- 1-Year Share Price Return: +32.2%
- 30-Day Average Trading Volume: 154,800
- Return on Equity (F2020): 35.0%
- Return on Equity (F2017): 15.5%
Pollard Banknote Limited (TSX:PBL) – $56.20
Lottery and Gaming
Pollard Banknote is a leading lottery partner to more than 60 lotteries worldwide, providing high quality instant ticket products, licensed games, Schafer Systems and Fastrak retail merchandising solutions, and a full suite of digital offerings, ranging from world-class mkodo game apps to comprehensive player engagement and iLottery solutions, including strategic marketing and management services. The Company is a proven innovator and has decades of experience helping lotteries to maximize player engagement, sales, and proceeds for good causes. Pollard Banknote also provides pull-tab tickets, bingo paper, and its Diamond Game and Compliant Gaming electronic games and devices to charitable and other gaming markets in North America.
- Market Cap: $1,511.7M
- YTD-Return: +57.2%
- 1-Year Share Price Return: +277.2%
- 30-Day Average Trading Volume: 29,850
- Return on Equity (F2020): 25.1%
- Return on Equity (F2017): 10.0%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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