The Canadian industrial stocks on our list are trading at attractive valuations relative to their peers
SmallCapPower | December 21, 2017: As of Q3/2017, Canada’s GDP advanced 4.9% Y/Y, while the unemployment rate fell to 5.9%, down 15% over the same period. Given the positive economic indicators for Canada’s economy, we have identified four Canadian industrial stocks that may deliver strong shareholder returns during 2018.
Exco Technologies Ltd. (TSX:XTC) – $9.66
Industrial Machinery & Equipment
Exco Technologies develops dies, moulds and other consumable equipment, primarily for the automotive and die-cast industries. Based in Canada, the Company has 17 manufacturing facilities across eight countries, which employ over 6,500 individuals.
- Market Cap: $410 Million
- YTD Total Return: -7.6%
- 3 Month Total Return: 1.0%
- Enterprise Value to EBITDA (FY2018): 5.1x
- Peer Median EV/EBITDA: 14.8x
Cervus Equipment Corp. (TSX:CERV) – $15.33
Heavy Machinery & Vehicles
Cervus Equipment is an industrial equipment dealer that sells a variety of brands, including John Deere, Bobcat and Sellick. The Company operates through 63 locations in Canada, Australia and New Zealand, which sell equipment from seven brands.
- Market Cap: $240 Million
- YTD Total Return: -1.6%
- 3 Month Total Return: 15.1%
- Enterprise Value to EBITDA (FY2018): 5.5x
- Peer Median EV/EBITDA: 14x
Rocky Mountain Dealerships Inc. (TSX:RME) – $13.78
Heavy Machinery & Vehicles
Rocky Mountain Dealerships is a Canada-based dealer selling a variety of construction and agricultural equipment. The Company’s operations are focused in Alberta, Saskatchewan and Manitoba, where the Company employs ~1000 individuals via its 35 dealerships.
- Market Cap: $267 Million
- YTD Total Return: 48.1%
- 3 Month Total Return: 28.8%
- Enterprise Value to EBITDA (FY2018): 6.3x
- Peer Median EV/EBITDA: 14.8x
Stuart Olson Inc. (TSX:SOX) – $7.05
Construction & Engineering
Stuart Olson operates as a full-service engineering and construction company, serving various clients across Canada. The Company has clients in commercial & residential development, oil & gas, hospitality, mining and healthcare. Stuart Olson’s major projects include the Aurico gold project in Ontario and the 360,000-square foot Aberdeen Mall in British Columbia.
- Market Cap: $193 Million
- YTD Total Return: 29.0%
- 3 Month Total Return: 34.8%
- Enterprise Value to EBITDA (FY2018): 6.3x
- Peer Median EV/EBITDA: 11.4x
Disclosure: Neither the author nor any of the principals at SmallCapPower, or their family members, own units in any of the companies mentioned above.
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