The Canadian stocks on our list have benefitted from stellar five-year EBITDA growth
SmallCapPower | March 25, 2019: EBITDA is typically used by investors as a proxy to determine free cash flow of a company. It is calculated by adding back interest, taxes, depreciation, and amortization to net income. EBITDA is an important indicator used to measure the financial performance of a company, as it shows earnings before accounting and financial deductions impact the values. A high EBITDA is a good indicator that the Company can pay off its debts within the near term. This provides an advantage in comparing across companies and industries, as these deductions will vary and distort the comparison. As well for capital-intensive industries, such as mining or oil & gas, EBITDA may be misleading as its capital expenditures (CAPEX) such as property, plant, and equipment (PP&E) are ignored. Today we have uncovered four Canadian stocks that have seen strong EBITDA growth over the past five years. This could be an indication of continued growth in the future.
*Share prices are as at close March 21, 2019, data obtained from S&P Capital IQ
StorageVault Canada Inc. (TSXV:SVI) – $2.74
Real Estate & Storage
StorageVault Canada focuses on acquiring and building storage facilities, and is currently managing over six million sq. ft. In January 2019, the Company announced an agreement to acquire Real Storage’s 38 store portfolio. Since 2016, SVI has made annual acquisitions. In the most recent fiscal year, total M&A was valued at $17.2M. The Company also acquired Sentinel Self Storage in 2017 and gained national storage assets in 2016. The most substantial growth that the Company has experienced in its EBITDA coincides with these purchases. The EBITDA is above the consensus of $48.8 M, at $59.7M.
- Market Cap: $825.0 Million
- F2018A EBITDA: $59.7 Million
- EBITDA Margin: 64.6%
- EBITDA, 5-Year CAGR% (LTM): 101.2%
- 1-Month Total Return: -0.7%
- 3-Month Total Return: +14.1%
Protech Home Medical Corp. (TSXV:PTQ) – $0.90
Health Care Services
Protech Home Medical offers in-home patient monitoring and disease management in the United States. The Company plans to increase revenues per patient by offering a broader range of services. Services include distribution platforms for respiratory and sleep aid machines as well as mobility aids. On December 17, Protech announced it had completed its acquisition of Riverside Medical Inc. and Central Oxygen Inc. The acquisitions have helped the Company increase its revenue and EBITDA. PTQ plans to further pursue strategic acquisitions by capitalizing the additional funds it has raised. As of December 31 (Q3/18), the Company had $6.2 M in cash on its Balance Sheet. Its EBITDA is currently above the consensus estimates of $10.8M at $12.3M.
- Market Cap: $76.0 Million
- F2018A EBITDA: $12.3 Million
- EBITDA Margin: 19.98%
- EBITDA, 5-Year CAGR% (LTM): 83.1%
- 1-Month Total Return: +1.1%
- 3-Month Total Return: +51.7%
Hamilton Thorne Ltd. (TSXV:HTL) – $1.08
Health Care Equipment
Hamilton Thorne offers precision laser and image analysis devices. These products are used for in vitro fertilization and development of biological research. The Company’s focus is on furthering regenerative medicine, stem cell research and core fertility. Hamilton Thorne’s main market segments include B2B, such as pharmaceutical companies, biotechnology companies, animal breeding facilities and fertility clinics among others. Hamilton Thorne had a US$3.0M line of credit approved on November 15, 2018 to fund further acquisitions. In addition, the bank has committed to fund 55% of the acquisition price. On September 14, 2018, the Company announced the completion of a $10.0M private placement and plans to use the net proceeds to fund acquisitions and for general working capital purposes.
- Market Cap: $128.3 Million
- F2018A EBITDA: $6.1 Million
- EBITDA Margin: 20.95%
- EBITDA, 5 Year CAGR% (LTM): 95%
- 1-Month Total Return: +3.9%
- 3-Month Total Return: +23.3%
Cargojet Inc. (TSX:CJT) – $78.10
Air Freight and Logistics
Cargojet is a Canada-based bulk air transportation services company. On any given night the Company carries ~1.3M pounds of freight. CJT offers overnight shipment between 14 Canadian cities, as well as air transportation for passengers, and provides scheduled international routes for customers and speciality shipments. The speciality shipments include military equipment, large shipments, and emergency relief supplies. On February 5, 2019, the Company announced it has acquired Mirabel International Airport in Quebec. This is expected to aid in the Company’s strategy to insource all ground handling operations in the Canadian airports. Its EBITDA is currently above the consensus estimate by $1.3M at $128.0M.
- Market Cap: $1,089.1 Million
- F2018A EBITDA: $128.0 Million
- EBITDA Margin: 34.2%
- EBITDA, 5 Year CAGR% (LTM): 52.7%
- 1-Month Total Return: -4.0%
- 3-Month Total Return: +20.9%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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