The Canada-listed illiquid stocks we’ve dug up have provided investors with superior returns over the past five years
SmallCapPower | August 26, 2019: Investing can be a challenge for retail investors as they often have to compete with institutional investors with more resources. One way to avoid competing with large institutional investors is to target illiquid stocks; a stock with a low trading volume. Institutional investors will generally avoid illiquid stocks out of fear that they won’t be able to buy or sell the asset at the price they are targeting. Today we have sifted through and found four Canada-listed illiquid stocks that have performed well on a five-year basis as well as on a year-to-date basis.
*Share prices are as at August 22, 2019, data obtained from S&P Capital IQ
Richards Packaging Income Fund (TSX:RPI.UN) – $41.33
Metal and Glass Containers
Richards Packaging Income Fund owns Richards Packaging Inc, the third-largest packaging distributor in North America. Richards Packaging is a full-service packaging distributor that targets small and medium sized North American businesses. Richards Packaging has operated since 1912 and currently serves over 14,200 regional companies from 18 locations throughout North America. On July 29, Richards Packaging Income Fund announced its financial results for Q2/19. These results featured revenue of $85.5M, up ~4.4% from the previous quarter and beating analyst estimates of $83.5M. Notably, the Company also posted EBITDA of $12.3M, up ~7% from the previous quarter while beating analyst estimates of $12.1M.
- Market Cap: $450M
- YTD Return: 18.4%
- 5 Year Return: 205.9%
- 1 Month Average Trading Volume: 3,425
Geodrill Limited (TSX:GEO) – $1.82
Diversified Metals and Mining
Geodrill provides exploration and development drilling services to various mining companies. The Company’s client mix is made up of major, intermediate and junior players that are exploring for gold and other minerals. The Company’s operational proximity to countries such as Mauritania, Liberia, Sierra Leone, Nigeria and Cameroon position GEO favourably in its ability to service these markets. Geodrill operates a fleet of multi-purpose rigs, which offer the versatility of being able to perform both reverse circulation and diamond-core drilling. On August 6, Geodrill Limited reported its financial results for Q2/19. These results featured revenue of $27.8M, representing an increase of ~25.8% from the previous quarter, and EBITDA of $7.7M, representing an increase of ~42.6% from the previous quarter.
- Market Cap: $80.2M
- YTD Return: 28.2%
- 5 Year Return: 87%
- 1 Month Average Trading Volume: 6,000
First National Financial Corporation (TSX:FN) – $35.44
Thrifts and Mortgage Finance
First National Financial is a Canada-based originator, underwriter and servicer of predominantly prime residential and commercial mortgages. The Company has ~$110B in mortgages under administration and is Canada’s largest non-bank originator and underwriter of mortgages. On August 15, First National Financial Corporation announced its monthly dividend payment of $0.1583 per common share for the period August 1 to August 31 payable on September 16. FN has a 5.32% dividend yield.
- Market Cap: $2.1B
- YTD Return: 27.7%
- 5 Year Return: 55%
- 1 Month Average Trading Volume: 11,000
Xpel Inc. (TSXV:XPEL.U) – $8.79
Auto Parts and Equipment
XPEL manufactures, sells, distributes, and installs after-market automotive products in the United States, Canada, and the United Kingdom. The Company’s product offerings include paint protective films, headlight protection, automotive window films, and plotters. XPEL also provides apparel, merchandise, installation tools, and microfiber products through its online platform. Additionally, Xpel Inc offers installation services and installation training courses.
- Market Cap: $242.7M
- YTD Return: 46%
- 5 Year Return: 204.2%
- 1 Month Average Trading Volume: 12,000
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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