In this edition of ‘Stock Teasers’, we are going to be looking at Canadian stock outliers using a unique screener in each edition. The screeners have two main variables, of which will change each time, and the end goal is to find a group of stock outliers on the graph and identify why they might be outliers.

Canadian Stock Outlier Screener

Below, we have used the following variables across the Canadian stock universe: 10-year total revenues CAGR and percentage below 52-week high. The first variable is fairly self-explanatory, this is the annualized sales growth rates for these sets of stocks over the past 10 years. The second variable indicates whether a stock is near its 52-week high, or well below it. The closer a stock is to its 52-week high implies that its price is increasing, and likely, it is doing something right.

We have outlined a set of stocks below that we have identified as ‘outliers’ on the scatter plot. This green-shaded area indicates stocks that are close to their 52-week highs, and have historically grown their sales faster than the rest of the Canadian stock universe.

Let’s take a closer look into which stocks encompass this quadrant of the graph. We can see Element Fleet Management (EFN), RB Global (RBA), WSP Global (WSP), Parkland Corp (PKI), Atlagas (ALA), and Constellation Software (CSU) are in this area.

A brief commentary on why these specific companies are near their 52-week highs is below:

Element Fleet Management (EFN): Its stock has been performing well due to its consistent profitability and strategic acquisitions. It has a diversified revenue base and has shown a healthy margin profile for several years.

RB Global (RBA): It has been resilient and outperformed most peers throughout the challenging year of 2022. It pays a yield of 3.4%, analysts expect strong sales and earnings growth going forward and trades at a reasonable valuation of 21.7X forward P/E.

WSP Global (WSP): WSP has proven its ability to successfully acquire and integrate businesses to further its market expansion and top-line growth. It has a strong pipeline of opportunities in its Canadian markets and has seen both organic and inorganic growth.

Parkland Corp (PKI): Management noted that Canada’s population growth is driving up demand for fuel, which has contributed to its strong market performance.

Atlagas (ALA): ALA has been performing well recently as the price of natural gas has bottomed over the past year. Its balance sheet is strong and it recently closed a $400 million medium-term note offering, which could provide the company with capital to invest in growth opportunities.

Constellation Software (CSU): Is one of 5i Research’s favourite names in the Canadian space, and it is no surprise to us that it is on the list. CSU has provided shareholders with tremendous value over the years, and its management team has been an example for most. Its strategic acquisitions and shareholder-friendly practices have enabled the stock to perform well over the years.

Common Theme Among Canadian Stock Outliers

We hope that readers enjoyed this edition of ‘Stock Teasers’ talking about some of the Canadian stock outliers for long-term revenue growth and stocks near their 52-week highs. We found one common theme among these names is that the businesses underlying their operations have all been rebounding or performing well recently, leading to an improvement in business operations. For other editions of our ‘Stock Teasers’, check out this latest blog on Thoughts From Reddit!

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