The Canadian stocks on our list have more cash than the market value of their equity, and could be considered attractive takeover targets
SmallCapPower | May 11, 2018: Businesses that carry more cash than their market cap are often attractive takeover targets. These companies also have the opportunity to invest in new projects, pay down debt or otherwise strengthen their operations. The four Canadian stocks on our list today have a last reported cash balance exceeding their current market cap.
Transat AT Inc. (TSX:TRZ) – $8.30
Leisure & Recreation
Transat AT is a Canadian travel and leisure company offering a full suite of transportation, hospitality, and tour services. As the parent of discount airline Air Transat, the company also operates tour services in the Caribbean, a travel agency, and owns a minority stake in a small hotel chain. Beginning in 2018, Transat plans to launch a wholly-owned hotel chain in Mexico and the Caribbean to reduce the seasonality of its earnings by improving profitability in the winter months.
- Market Cap: $310.7 Million
- Cash/Market Cap: 2.4x
- Cash and Short-Term Investments: $749.3 Million
- YTD Total Return: -26%
GrowMax Resources Corp. (TSXV:GRO) – $0.10
Agricultural Chemicals
GrowMax is a Canada-based fertilizer company, concentrated on the exploration and development of phosphate and potassium-rich brine resources. The development of its flagship Bayovar property, located in the Sechura Desert of Peru, is the main foundation of its operations and growth strategy. The company also seeks to consolidate the junior fertilizer market in Latin America and is exploring possible M&A opportunities in the near future.
- Market Cap: $21.4 Million
- Cash/Market Cap: 1.8x
- Cash and Short-Term Investments: $39.2 Million
- YTD Total Return: -5%
Primeline Energy Holdings Inc. (TSXV:PEH) – $0.07
Oil & Gas Exploration and Production
Primeline Energy is a Hong Kong-based oil and gas producer, focused on the Chinese market. It operates offshore drilling platforms in the East China Sea where it partners with China National Offshore Oil Corporation (NYSE:CEO) to supply the Zhejiang Province. The supplied area is home to 50+ million people and has experienced rapid population growth in the past 10 years.
- Market Cap: $16.6 Million
- Cash/Market Cap: 1.5x
- Cash and Short-Term Investments: $25.1 Million
- YTD Total Return: 0%
Minco Silver Corp. (TSX:MSV) – $0.71
Silver
Minco Silver is a Canada-based silver mining company with ownership of metal rich properties in southern China. Through a subsidiary, the company controls a 100% ownership stake in the Fuwan Silver deposit, in the Guangdog Province. In 2015, Minco acquired a 51% interest in the Changkeng gold deposit, located immediately north of its Fuwan property. Over the next five years, Minco plans to put both mines into operation and explore additional M&A opportunities in the surrounding area.
- Market Cap: $42.6 Million
- Cash/Market Cap: 1.1x
- Cash and Short-Term Investments: $47.4 Million
- YTD Total Return: -16%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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