Welcome to the second edition of our new series, ‘Stock Teasers’, where we aim to provide investment research on a wide range of topics. In this edition, Cross-Border Stocks, we spotlight one Canadian stock and one US stock, regardless of sector or size. Let’s dive in!

Canadian Stock: Terravest Industries Inc. (TVK)

TVK is a Canadian company that operates as a serial acquirer of niche equipment and services for a variety of markets including transportation, mining, transportation, etc.

Over the past 10 years, its price has compounded at a 31.6% annualized rate, supported by healthy growth in fundamentals, and TVK’s sales growth during that period was 26.6% CAGR. Solid sales growth was driven through a combination of organic growth and acquisitions It currently has a market cap of $900 million, a reasonable forward P/E of 21.4X, and a decent financial position with a net debt/EBITDA of around 2.0x.

TVK has a disciplined and opportunistic approach to capital allocation. It has a dividend yield of 1.2% as TVK reinvested heavily back into the business. In 2021, TVK opportunistically reduced its outstanding shares by 6% while the valuation was cheap.

The graph below shows that its share price has been steadily climbing up and to the right over the past several years. It has had a decent momentum recently but is still largely unknown to the majority of investors.

US Stock: Saia, Inc. (SAIA)

SAIA is one of the largest less-than-truckload carriers in the U.S. The company provides transportation, logistics, shipments and other value-added services, and is known as one of the most efficient operators in the industry.

SAIA is a high-quality compounder with an impressive 10-year annualized return, its share price has compounded at approximately a 30% annualized rate, this is due to the high return on capital and positive operational leverage of the business model. Solid sales growth was mainly driven organically through heavy internal reinvestment. It currently has a market cap of $11.9 billion, a forward P/E of 29.6X, and a solid balance sheet with no long-term debt (other than long-term leases).

SAIA is an interesting case study for companies that retained the majority of their earnings. It does not pay any dividends or repurchase shares at a meaningful scale but consistently compounded EPS at double-digit rates.

The graph below shows that its share price has been steady over time. It is trading at a premium valuation as investors are optimistic about the long runway for reinvestment of the business.

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