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The Market Online
3 days ago
- Business
- The Market Online
3 of the TSX Index's smallest and most profitable stocks
The comfort and lower volatility from concentrating your portfolio in large-cap stocks, often tied to recognizable brands will, over the long term, come at the cost of lower returns versus diversifying into small-cap names. According to Provisus Wealth Management, this disparity amounts to 4.1 per cent annually from 1957 to 2023. These smaller-cap companies offer a greater potential for market-beating returns compared to their larger counterparts thanks to a combination of minimal analyst coverage, market misperception, longer growth runways, as well as unproven and therefore higher-risk businesses. These conditions place a premium on investors able to get their hands dirty and comb through financials to unearth companies best positioned to deliver shareholder value. The question of the hour then becomes, how should an active investor approach the harvesting of small-caps' differentiated returns so as to maximize the potential outcome while minimizing risk? How I picked 3 of the TSX's smallest and most profitable stocks To put our thesis in play, I got my hands on The Globe and Mail's dataset on the TSX Index, which represents about three quarters of the TSX's market capitalization and sets minimums on liquidity and trading volume that will offer some foundational stability to our stock picks. I then used the list's functionality to order the companies from smallest to largest market cap, maximizing for small-caps' higher relative historical return, and proceeded to work my way through the income statements of the smallest and most profitable companies – measured by earnings per share (EPS) – over the past year. Limiting myself to the first quartile of the list, or approximately 50 names, I kept my eyes peeled for patterns of profitable growth, favoring net income and multi-year track records, increasing the probability of management skill over luck and a potential investor's conviction in the company's future success. Here are the top-three stocks I ended up with: Trisura Group – EPS of C$2.3 year-over-year. Killam Apartment REIT – EPS of C$5.36 year-over-year. GoEasy – EPS of C$15.22 year-over-year. 3 of the TSX's smallest and most profitable stocks 1. Trisura Group Our first profitable stock pick in the TSX Index is Trisura Group, market cap C$1.88 billion, a specialty insurance company in Canada and the United States operating in the surety, warranty, corporate insurance, program and fronting markets. The company's Canadian operations began in 2006, after being spun off from Brookfield Asset Management (TSX:BAM), and have built a 17-year underwriting track record, while its US business has been active in fronting since 2018 and is licensed to do business in admitted markets in 49 states and in non-admitted markets in all 50 states. Trisura grew revenue by over 15 times from C$190 million in 2020 to C$2.87 billion in 2024, while growing net income by 3.66 times from C$32.44 million to C$118.92 million, respectively. This prospective trend continued into Q1 2025 with revenue of C$622 million, net income of C$28.99 million and a low 10.7-per-cent debt-to-capital ratio that president and chief executive officer David Clare sees as key to the company's flexibility and growth potential. Steered by a management team averaging over 30 years of industry experience, the company is well-positioned to deliver on its ambitious growth plans – as laid out in its March 2025 investor presentation – which include surpassing C$1 billion in book value by 2027, up from a record C$820 million in Q1 2025. Trisura Group (TSX:TSU) last traded at C$39.65. The stock has given back 4.16 per cent year-over-year but remains up by 199.25 per cent since 2020. 2. Killam Apartment REIT Our next profitable small-cap is Killam Apartment, market cap C$2.35 billion, one of the largest residential real estate investment trusts (REIT) in Canada, owning, developing and managing about C$5.5 billion in apartments and manufactured home communities across Ontario, Alberta, Atlantic Canada and British Columbia. The company's value creation strategy focuses on increasing earnings from existing operations, offering high-quality properties in core markets, geographical diversification into newer properties and the disposition of non-core assets. While net income bounced around a fair bit during the COVID years, Killam has posted three years of consecutive growth under the metric from C$122.52 million in 2022 to C$667.84 million in 2024. The company has kept this momentum going with an additional C$93.02 million in revenue and C$101.91 million in net income in Q1 2025 supported by a high same property occupancy levels of 97.5 per cent, a record low debt-to-total-assets ratio of 39.9 per cent and a year-over-year increase in funds from operations of 7.7 per cent to C$0.28. Protected by internally generated cash flow, a defensive portfolio with only 17 per cent of properties above C$2,000 per month in rent, as well as management's sound capital allocation – as evidenced by consistently falling debt-to-normalized EBITDA from 11.33x in 2021 to 9.66x in Q1 2025 – Killam is a fortress of an option when it comes to capitalizing on an essential market, which has shown resilience in the face of irrational pessimism stemming from more restrictive federal immigration policies. Killam stock (TSX: last traded at C$19.47. The stock has added 13.26 per cent year-over-year, 14.12 per cent since 2020 and 89.21 per cent since 2015. 3. GoEasy Last in our trio of profitable stocks on the TSX Index is GoEasy, market cap C$2.41 billion, which specializes in non-prime leasing and lending under the easyhome, easyfinancial and LendCare brands. The company operates over 400 locations across Canada, boasting about 11,000 merchant partners, offering a product suite that includes unsecured and secured instalment loans, merchant financing and lease-to-own merchandise in the retail, powersports, automotive, home improvement and healthcare spaces. Since inception, GoEasy has served over 1.5 million Canadians and originated over C$16.6 billion in loans. The company has compounded revenue at a staggering 28 per cent per year since 2014, including tripling the figure from C$652.92 million in 2020 to C$1.52 billion in 2024, with a healthy C$391.8 million collected in Q1 2025. In terms of profitability, the company has compounded net income at 30.4 per cent since 2014, improving its performance over the past three years from C$140.16 million in 2022, to C$247.90 million in 2023, to C$283.11 million in 2024, with a respectable C$39.40 million generated in Q1 2025. With management expecting higher revenue and operating margins through 2027 and the need for alternative credit at an all-time-high, with Canadian consumer debt hitting a new record in Q4 2024, GoEasy is a top-shelf consideration to complement your existing financials exposure. GoEasy stock (TSX:GSY) last traded at C$149.79. The stock has given back 19.61 per cent year-over-year but remains up by 163.85 per cent since 2020. Should you invest in Trisura, Killam or GoEasy today? The question of whether or not the stocks we've discussed today belong in your portfolio hinges on your financial goals, risk tolerance and time horizon, or the number of years you have to invest before needing to draw on your funds. It also depends on your ability to conduct due diligence on a prospective company and come to a high-conviction decision, allowing you to remain invested over the long term despite volatility that may suggest reasons for panic. Take care to paint a clear picture of your personal financial circumstances and stay up to date on your favorite public companies to best tailor your time in the markets. Join the discussion: Find out what everybody's saying about these profitable small-cap stocks on the Trisura Group Ltd., Killam Apartment REIT and GoEasy Ltd. Bullboards and check out the rest of Stockhouse's stock forums and message boards. The material provided in this article is for information only and should not be treated as investment advice. 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Yahoo
20-05-2025
- Business
- Yahoo
These Stocks Simply Look Too Cheap to Ignore Any Longer
Written by Joey Frenette at The Motley Fool Canada If you sold in May and went away, you missed out on a more than 4% gain in the TSX Index and S&P 500, a striking return in around two weeks. And while Trump's tariff talks may be far from over, it seems like the bargain hunters are ready and willing to step in despite recession risks, which Jamie Dimon, CEO of JPMorgan Chase, still believes is on the table for the American economy. Undoubtedly, a recession has proved quite elusive in recent years. While we'll eventually get one (whether it's tariffs, a crisis, or some other event that weighs heavily on economic growth), investors shouldn't forego the low-cost stocks that they're tempted to pick up just because someone smart on Wall Street thinks that the economy could be in for a bit of a doozy. At the end of the day, long-term investors must steer through all sorts of environments. And riding through the rocky terrain is just a part of what's to be expected. The market road to retirement isn't always freshly paved. Many beginning investors find this out the hard way as they sell into a sell-off, missing the sharp rebound and being forced to buy back their shares at higher prices. Of course, it was hard to buy the April dip in stocks. But if you went on a month-long vacation the day after Liberation Day tariffs sank global financial markets, you would have done just fine. In any case, changing your investing game plan based on a single event or pundit prediction is a dangerous game that may lead to returns that trail those of the market averages. In this piece, we'll consider two stocks that I find to be great bargains right now as the TSX Index looks to add to its recent breakout gains. CN Rail (TSX:CNR) stock is in recovery mode again after steadily descending for the past year. While most stocks tend to take the elevator down and the stairs back up again, some names tend to do the opposite. With CNR shares soaring over 14% so far in May, the railway giant seems to be taking the elevator back up after steadily rolling down the stairs for just north of a year. Indeed, the dividend-growth stock is buying back its own shares, as they look severely undervalued and oversold. With promising growth drivers and a lower bar to pass for future quarters, I think the latest rally is worth getting behind. The stock still yields a generous 2.4%, with a modest 20.8 times trailing price-to-earnings (P/E) multiple. For a wide-moat firm that stands to gain if a potential new North American trade deal gets announced (soon, hopefully), I'd not dare bet against the dividend grower, as it makes a run past $150 per share. Bank of Montreal (TSX:BMO) has also been heating up of late alongside the TSX Index, now up over 11% in the past month. At 13.5 times trailing P/E, with a 4.44% dividend yield, BMO stands out as a great deal of the big Canadian bank stocks. With new highs in sight and respectable exposure to businesses south of the border, I'd be inclined to be a buyer rather than a seller of the $104.5 billion financial at these levels. Sure, the ride could be bumpier, with a 1.20 beta, which entails more correction with the broad market, but for the impressive dividend, the name certainly seems like a great way to ride the economy higher once we're given more clarity with trade. The post These Stocks Simply Look Too Cheap to Ignore Any Longer appeared first on The Motley Fool Canada. Before you buy stock in Bank of Montreal, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Bank of Montreal wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $21,345.77!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*. See the Top Stocks * Returns as of 4/21/25 More reading Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS] Market Volatility Toolkit Best Canadian Stocks to Buy in 2025 Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Joey Frenette has positions in Bank Of Montreal and Canadian National Railway. The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy. 2025
Yahoo
30-04-2025
- Business
- Yahoo
CN Rail vs. CP Rail: Where I'd Put $10,000 in Canadian Railway Stocks
Written by Joey Frenette at The Motley Fool Canada The Canadian railway stocks have been lagging behind the TSX Index and S&P 500 in recent years. Undoubtedly, as Trump's tariff war intensifies and fewer shipments circulate across the continent, the top rail players could stand to be weighed down further. Indeed, wide-sweeping tariffs and their impact may already be partially baked into today's share price. And while only time will tell just how bad the first round of tariffs will hurt, I think there's a pretty strong case for value hunters to start nibbling into a position in a top rail play today, as investors throw in the towel amid tariffs and their potential to cause a bit of a trade drought of sorts. At the end of the day, the top Canadian rail stocks are stellar firms with some of the widest moats around. And while they may be a tad too economically sensitive for most amid a tariff war, those with an investment horizon of at least 10 years ought to be viewing the latest correction in the top transports as more of a buying opportunity. Though I'm not against putting $10,000 in a single name at one time, I do think building a position through the year could be the most prudent move, given it's not at all certain how hard tariffs will hit earnings. With that in mind, I'd start with a $2,000 position and add to it on any further dips, perhaps those that follow underwhelming quarterly showings. But which rail stock is the better bet as they roll into a tariff summer? CN Rail (TSX:CNR) stock seems to have a lot of tariff risk priced in, with shares off close to 26% from their all-time highs. Indeed, this is one of the worst bear markets for CN in a long time. And while another 'lost year' could be in the cards for the stock that's fallen off the tracks, I am a fan of the fast-growing dividend. At the time of this writing, shares yield just shy of 2.7%. That's the most swollen I've seen the yield outside of crisis-level conditions. With a solid dividend-growth history and sudden upside if a trade deal were to be inked sooner rather than later, I'd be inclined to be a net buyer of the dip steadily accumulating through the year. Indeed, catching a bottom in a name that's steadily declining will not be easy. That's why I'd aim to take timing out of the game with a dollar-cost averaging (DCA) approach. CP Rail (TSX:CP) or CPKC is the growthier of the two rail stocks, but it's one that I believe also carries more risks as Trump's tariff war heats up for the summer season. Indeed, management seems to be playing the long game, but many investors may not be willing to ride out the rough patch, especially given its heightened tariff risk. With lots of cross-border freight and a heftier valuation, I think CP stock could be subject to more downside going into year's end. Indeed, higher rewards (and growth) potential often accompany more risk. Now down 19.4%, shares of CP are just below $100 per share. And while there's a robust support level up ahead at the $95–98 level, I wouldn't be so quick to pounce on shares. Not at 24.9 times trailing P/E. That's too rich a multiple for a mere 0.8%-yielder. For now, I find CNR stock to be a better bet, given its lower multiple and much higher yield. The post CN Rail vs. CP Rail: Where I'd Put $10,000 in Canadian Railway Stocks appeared first on The Motley Fool Canada. Before you buy stock in Canadian National Railway, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Canadian National Railway wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $21,345.77!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*. See the Top Stocks * Returns as of 4/21/25 More reading Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS] Market Volatility Toolkit Best Canadian Stocks to Buy in 2025 Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Joey Frenette has positions in Canadian National Railway. The Motley Fool recommends Canadian National Railway and Canadian Pacific Kansas City. The Motley Fool has a disclosure policy. 2025 Sign in to access your portfolio
Yahoo
22-03-2025
- Business
- Yahoo
2 Overlooked Mid-Caps That Demand Attention Today
Written by Joey Frenette at The Motley Fool Canada Don't discount the growth potential of the mid-cap Canadian stocks, especially now that the TSX Index is fresh off a dip (a near correction, if you'd like to call it that). Undoubtedly, mid-cap stocks can be a choppier ride. While they may not be necessary to build a solid portfolio aimed at long-term growth, I think that diversifying into the lesser-known smaller-cap names could prove a wise move, especially for those investors out there who want to unearth potentially hidden gems. Indeed, it's nice if you can get a bit more bang for your investment dollar, even if it entails looking to corners of the Canadian stock market where most other retail investors don't spend nearly as much time. Indeed, there may be slightly greater discrepancies between the market price of a mid-cap stock and its true worth. As a value investor, you should strive to find such opportunities to pay three quarters to get a full dollar. And while such opportunities don't come along all that often, especially with the large-cap blue chips that investors (and those in the mainstream financial media) spend most of their time following, I think the odds for deeper value exist in somewhat greater abundance in the smaller-cap waters. Sure, trading volumes may be lower, and the volatility may be tougher to bear, but if you consider yourself a deep-value investor who's willing to find value wherever it can be found in the markets at any given time, the following mid-cap stocks, I believe, are fantastic gems worthy of adding to your radar or buying today while they're off a bit from their prior highs. In this piece, we'll have a quick look at two names that I think look way too cheap going into April 2025. So, if you're ready for a mid-cap bargain, the following pair may be worth revisiting. Aritzia (TSX:ATZ) is a reasonably popular women's clothing brand with a stock that you may have forgotten about. Indeed, shares of the well-run retailer probably don't get as much attention as they deserve, especially given the robust brand and lengthy growth 'runway' in the U.S. market. In any case, with the stock recently nosediving over 25% from 52-week highs, I think there's an opportunity to pick up a few shares of the $6.1 billion retail growth gem on the way down. Indeed, tariff threats could act as an overhang for some number of months. But if you consider yourself a long-term investor, I'd be willing to start buying at close to $50 per share. The growth profile is heavily underrated, at least in my view. Jamieson Wellness (TSX:JWEL) is another legendary Canadian brand with a stock that's a mid-cap. At writing, shares boast a $1.25 billion market cap. The stock is down 22% from its 52-week highs and could be a great pick-up for value investors seeking a good mix of growth and defensiveness. At 24.9 times trailing price to earnings, JWEL stands out as a terrific bet. Near-term headwinds could weigh, but secular drivers (the wellness trend), I believe, are still worth getting behind. Finally, the dividend yield is close to the highest I've seen it at just shy of 3%. If you like the product and the brand, perhaps it's time to think about picking up the stock as we spring into the spring season. The post 2 Overlooked Mid-Caps That Demand Attention Today appeared first on The Motley Fool Canada. Before you buy stock in Aritzia, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Aritzia wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $20,697.16!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*. See the Top Stocks * Returns as of 3/20/25 More reading Best Canadian Stocks to Buy in 2025 Here's Exactly How $15,000 in a TFSA Could Grow Into $200,000 4 Secrets of TFSA Millionaires Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Aritzia. The Motley Fool has a disclosure policy. 2025 Sign in to access your portfolio
Yahoo
15-03-2025
- Business
- Yahoo
Top Value Stocks to Buy for Long-Term Wealth
Written by Joey Frenette at The Motley Fool Canada It can get pretty hard to stay the course when the stock market wobbles, U.S. markets sink into a correction, and all you hear is non-stop negativity when tuning into your favourite financial television show. Undoubtedly, it's been all about Trump, tariffs, and trade wars. Let the pessimism get to you, and it'd feel pretty good to hit the sell button on a wide range of names that have been weighing down your portfolio in recent trading sessions. And while it seems like things can only get worse from here as non-stop tariff news acts as a gravitational force on stocks, I think that long-term investors should buy despite expectations of continued pain. Indeed, Trump tariffs will bring a lot of pain. But just how much is, the big question. Either way, I think if you're in the markets for the next six to seven years (at minimum), it makes sense to do some buying right here, right now, while investors grow fearful of equities across the board. Indeed, whenever you have an indiscriminate sell-off, there can be huge opportunities within the names that may already be down by double-digit percentage points. In this piece, we'll look at a few names that I think will be fine in the long run, regardless of how the trade war plays out. Brookfield Corp. (TSX:BN) is an easy buy whenever it dips into a correction. The company has some of the best-in-class income-producing tangible assets out there. And while shares were overdue for a pullback after a meteoric rise to new all-time highs, I think that those who stick by the legendary alternative asset manager will continue to do well over the coming years, regardless of the economy's next trajectory. The stock has now shed 22% of its value, sinking way faster than the broader TSX Index. Though the bear market could have longer to go, I view shares as a fantastic bargain as the company looks to keep making smart investments in renewables and infrastructure. In short, BN stock is a great one-stop-shop value play amid this sell-off. If there's one name to walk away from this market rout, it'd have to be Brookfield Corp. It's oversold, and at some point, it'll be overdue for a bounce. Up next, we have shares of Apple (NASDAQ:AAPL), which are flirting with bear market territory, now down around 18% from all-time highs. Undoubtedly, it's just another one of the hard-hit Magnificent Seven stocks that have amplified downside in the markets. And while a bear market seems unavoidable, the lack of catalysts on the year seems like more than enough reason to ditch shares while they're trading at over 33.0 times trailing price to earnings. As analysts and investors punish the name for coming up short on artificial intelligence (AI), China headwinds and more, I think that the crowd is losing sight of the long-term plan. It seems like investors have completely forgotten about DeepSeek and how cheap it can be to 'catch up' in the AI race. All considered, AAPL is an oversold bargain that's worth checking out as the bear makes its return. The post Top Value Stocks to Buy for Long-Term Wealth appeared first on The Motley Fool Canada. Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $50 a share. Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune. Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now. Claim your FREE 5-stock report now! More reading Best Canadian Stocks to Buy in 2025 Here's Exactly How $15,000 in a TFSA Could Grow Into $200,000 4 Secrets of TFSA Millionaires Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube The Motley Fool has positions in and recommends Brookfield. Fool contributor Joey Frenette owns shares of Apple. The Motley Fool recommends Apple and Brookfield Corporation. The Motley Fool has a disclosure policy. 2025
