Three-year cash flow growth of 49%+ is a good indicator that the small caps on our list may initiate a dividend payout
SmallCapPower | January 11, 2017: An investor makes returns in a couple ways: stock price increases, and dividends. The latter is usually a function of how successful a business is at gaining profitability, and ultimately growing its free cash flow. Today, we have identified five small caps that may be set to initiate a dividend program as a result of their stellar three-year CAGR in free cash flows.
CRH Medical Corp. (TSX: CRH) – $7.66
Medical Equipment, Supplies & Distribution
CRH Medical Corporation, formerly Medsurge Medical Products Corp., is a healthcare products and services company that operates through segments, including the sale of medical products and the provision of anesthesia services. The Company specializes in the treatment of hemorrhoids utilizing its treatment protocol and technology. The Company also provides anesthesiology services to gastroenterologists in the southeastern United States through its subsidiaries.
- Market Cap: $556 million
- Revenue (LTM, mm): 88
- Free Cash Flow (FY0): 14 million
- FCF Growth (3-year CAGR): 113%
DMD Digital Health Connections Group Inc. (TSXV: DMG.H) – $0.22
Healthcare Facilities & Services
DMD Digital Health Connections Group Inc., formerly Aptilon Corporation, offers medical and healthcare provider data. It enables pharmaceutical, pharmaceutical marketing companies, digital advertising agencies and medical device companies to reach, message, connect and interact with the United States physicians and healthcare professionals through multiple access channels. The Company’s service offerings provide interactions through permission-based e-mail, targeted online advertisement-serving and mobile application advertising channels.
- Market Cap: $44 million
- Revenue (LTM, mm): 38
- Free Cash Flow (FY0): 11 million
- FCF Growth (3-year CAGR): 103%
Canfor Corp. (TSX: CFP) – $14.61
Forest & Wood Products
Canfor Corporation is a Canada-based integrated forest products company that is engaged in the production of softwood lumber, pulp and paper products, remanufactured lumber products, engineered wood products, wood pellets and energy. The Company operates through two segments: Lumber, and Pulp and Paper. Its Lumber segment includes logging operations, and manufacture and sale of various grades, widths and lengths of lumber, engineered wood products, wood chips and wood pellets. The Company’s Pulp and Paper segment includes purchase of residual fiber, and production and sale of pulp and paper products, including Northern Bleached Softwood Kraft (NBSK) and Bleached Chemi-Thermo Mechanical Pulp (BCTMP), as well as energy production.
- Market Cap: $1,937 million
- Revenue (LTM, mm): 4,244
- Free Cash Flow (FY0): 66 million
- FCF Growth (3-year CAGR): 81%
Taiga Building Products Ltd. (TSX: TBL) – $1.00
Forest & Wood Products
Taiga Building Products Ltd. (Taiga) is an independent wholesale distributor of building products. The Company distributes its products, which include dimension lumber; panel products, including plywood, particle board and oriented strand board, and allied and treated products, such as roofing materials, moldings, composite decking, polyethylene sheeting, batt and foam insulation, flooring, engineered wood and treated wood. It markets treated wood under the brand name Taiga Select. The Company also owns and operates over three wood preservation plants that produce pressure-treated wood products.
- Market Cap: $32 million
- Revenue (LTM, mm): 1,233
- Free Cash Flow (FY0): 14 million
- FCF Growth (3-year CAGR): 49%
People Corp. (TSXV: PEO) – $4.60
Employment Services
People Corporation is a Canada-based employee benefit, pension and human resource consulting company. The Company is involved primarily in the delivery of employee group benefit consulting, pension consulting and third-party benefits administration services, as well as recruiting services, strategic human resources consulting and career management services to allow companies recruit, retain and reward employees.
- Market Cap: $233 million
- Revenue (LTM, mm): 80
- Free Cash Flow (FY0): 4 million
- FCF Growth (3-year CAGR): 49%
