4 Canadian Small Cap Stocks That Generate a High Return on Equity

The Canadian small cap stocks on our list all have high Return on Equity (ROE) ratios

SmallCapPower | June 16, 2017: Before investing in a company, it is good to see how effectively they have put invested capital to use. In doing so you look at the Return on Equity (ROE), which is a measure of how much profit a company generates with the money shareholders have invested. Today we have identified four Canadian small cap stocks with leading ROE ratios.

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Medicure Inc. (TSXV:MPH) – $7.25

Medicure Inc. (Medicure) is a pharmaceutical company engaged in the research, clinical development and commercialization of human therapeutics. The Company operates in the biopharmaceutical industry segment. The Company’s primary operating focus is on the sale and marketing of its acute care cardiovascular drug, AGGRASTAT (tirofiban hydrochloride) owned by its subsidiary, Medicure International, Inc. and distributed in the United States and its territories through the Company’s United States subsidiary, Medicure Pharma, Inc. AGGRASTAT, a glycoprotein IIb/IIIa inhibitor (GPI), is used for the treatment of acute coronary syndrome (ACS). The Company is also engaged in the development of TARDOXAL for neurological disorders, such as Tardive Dyskinesia (TD).

  • Market Cap: $113,283,620
  • Total Revenue (LTM): $37,778,470
  • Debt to Equity: 212.8%
  • ROE (LTM): 121%

Chorus Aviation Inc. (TSX:CHR) – $7.36

Chorus Aviation Inc is a Canada-based holding company, which holds various aviation interests. It operates through businesses, such as Jazz Aviation LP (Jazz), Voyageur Aviation Corp. (Voyageur) and Chorus Aviation Capital Corp. (CACC). Jazz operates through three divisions: Air Canada Express, through which Jazz provides service using the Air Canada Express brand throughout North America; Jazz Technical Services (JTS) provides maintenance, repair and overhaul (MRO) services to third parties, and Jazz division, which offers charters throughout North America with a fleet of three Bombardier aircraft and also offers airline operators services, such as ground handling, dispatching, flight load planning, training and consulting. Its Voyageur provides services to customers throughout the international and Canadian regional aviation markets.

  • Market Cap: $899,600,356
  • Total Revenue (LTM): $1,276,854,000
  • Debt to Equity: 649.2%
  • ROE (LTM): 57%

First National Financial Corp. (TSX:FN) – $25.64
Corporate Financial Services

First National Financial Corporation is a Canada-based parent company of First National Financial LP (FNFLP), which is an originator, underwriter and servicer of prime residential (single-family and multi-unit) and commercial mortgages. The Company operates through two segments: Residential (which includes single-family residential mortgages) and Commercial (which includes multi-unit residential and commercial mortgages). The Company provides mortgage-financing solutions to the mortgage market in Canada. The Company also invests in short-term mortgages, usually for six- to 18-month terms.

  • Market Cap: $1,537,564,879
  • Total Revenue (LTM): $1,049,818,000
  • Debt to Equity: 5,640.2%
  • ROE (LTM): 51%

Tembec Inc. (TSX:TMB) – $4.28
Paper Products

Tembec Inc is a Canada-based company engaged in the forest products business. It operates through four segments: Forest Products, Specialty Cellulose Pulp, Paper Pulp and Paper. The Forest Products segment consists primarily of forest and sawmill operations, which produce softwood lumber spruce/pine/fir (SPF) and specialty wood lumber. The Specialty Cellulose Pulp segment consists primarily of manufacturing and marketing activities of specialty cellulose, including the transformation and sale of resins and pulp by-products. The Paper Pulp segment includes the manufacturing and marketing activities of pulps. The Paper segment consists primarily of production and sales of coated bleached board and newsprint. The Company’s manufacturing operations are located primarily in Canada.

  • Market Cap: $430,000,000
  • Total Revenue (LTM): $1,306,000,000
  • Debt to Equity: 652.5%
  • ROE (LTM): 43%

Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.

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