The TSX-listed Canadian stocks on our list have generated Return on Assets (ROA) of more than 10%
SmallCapPower | July 26, 2021: Return on Assets (ROA) is a common profitability ratio used by financial analysts to determine how efficient management is at using its assets to generate earnings. The ratio is calculated by dividing a company’s net income by its total assets. The higher the return the more effective management is at utilizing the company’s assets to generate profit. This ratio used to be more widely used with manufacturing companies in the 1950s and 1960s. With the rise of internet and technology companies, which can generate profit with limited assets, its use has declined in recent years. However, it is still an important metric for industrial, finance, and retail companies. Today we have discovered four Canadian stocks with return on assets over 10%.
*Share price data and other metrics as of July 23, 2021
Dollarama Inc. (TSX:DOL) – $58.96
Dollarama is a Canadian value retailer, offering a broad assortment of consumable products, general merchandise and seasonal items through both brick-and-mortar stores and online. The Company has ~1,250 locations across Canada, providing customers with compelling value in convenient locations, such as strip malls and other high-traffic areas. The Company plans to have 1,700 stores open within 5-6 years. Dollarama’s merchandise is sold at select fixed price points up to $4.00. In 2020, Dollarama announced the acquisition of Dollar City, a chain of dollar stores operating in Latin American (Colombia and Peru), with plans to have 1,000 stores operating by 2027.
- Market Cap: $17,965.4M
- YTD-Return: +13.6%
- 1-Year Share Price Return: +24.4%
- 30-Day Average Trading Volume: 391,150
- Return on Assets (LTM): 13.5%
AirBoss of America Corp. (TSX:BOS) – $36.05
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. AirBoss announced recently that it had received a US$23 million contract to supply extreme cold weather footwear to the U.S. Department of Defense.
- Market Cap: $972.8M
- YTD-Return: +128.7%
- 1-Year Share Price Return: +79.4%
- 30-Day Average Trading Volume: 83,400
- Return on Assets (LTM): 16.3%
goeasy Ltd. (TSX:GSY) – $167.67
goeasy is a Canada-based, full-service provider of alternative financial services and has two main business segments: easyfinancial and easyhome. The easyhome segment provides consumer loans for furniture, electronics, computers and appliances, which are offered under weekly or monthly leasing agreements. Easyfinancial has ~$879.0M in consumer loans receivable and a 47% revenue CAGR over past seven years. The easyfinancial segment is its financial services arm, operating in the non-prime consumer lending marketplace. easyfinancial is focused on providing consumer installment loans with $49M in lease assets. The Company operates approximately 200 easyfinancial locations and over 180 easyhome stores across Canada.
- Market Cap: $2,765.7M
- YTD-Return: +73.5%
- 1-Year Share Price Return: +211.6%
- 30-Day Average Trading Volume: 44,400
- Return on Assets (LTM): 15.0%
Richards Packaging Income Fund (TSX:RPI.UN) – $64.70
Containers and Packaging
Richards Packaging Income Fund is a Canada-based open-ended, limited purpose trust. The Fund invests in packaging distribution businesses throughout North America. The Fund’s subsidiary, Richards Packaging Inc. and its subsidiaries, is principally engaged in the distribution of plastic and glass containers and associated closures. Richards Packaging distributes over 5,000 different types of packaging containers and related components sourced from over 600 suppliers and its approximately three manufacturing facilities. Richards Packaging’s customer base consists of approximately 13,300 regional food, beverage, cosmetic, specialty chemical, pharmaceutical and other companies. In addition to providing its customers with a range of packaging solutions, Richards Packaging provides design and development services and logistics management through approximately 20 sales offices and one agency location.
- Market Cap: $725.1M
- YTD-Return: -15.8%
- 1-Year Share Price Return: +0.7%
- 30-Day Average Trading Volume: 5,360
- Return on Assets (LTM): 18.9%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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