Five (non-energy, non-Alberta) stocks to watch this year

Aaron Hodson Jan 19, 2015

This article originally appeared in the Financial Post.

Investors are likely wondering what to do with their devastated oil stocks. When markets get crazy, as they clearly are right now, the best thing to do — usually — is nothing, at least as far as being active in a problem sector goes.

Most investors, of course, are looking at anything but resources these days and with that in mind, here are five non-energy, non-Alberta stocks that have potential this year.

None of these companies are widely known, which is one of the reasons we like them. We cover a few of them, but not all, and we think they could do well under the right conditions. One might even benefit from lower oil prices.

Currency Exchange International Corp. (CXI/TSX)

This $120-million market cap company offers retail and wholesale foreign exchange services. The stock trades at 21 times earnings, doesn’t have a dividend (yet) and has risen 72% in the past year.

In Currency Exchange’s most recent fiscal year, revenue rose 38% and net income increased 64%. This growth is even more impressive considering the company changed its fiscal year and the comparable period had 13 months of operations, not 12.

Interesting tidbit: Executives grew and sold a prior company in the exact same business, and are simply doing what they did before. Perhaps that’s why insiders own 27% of the stock.

First Capital Realty Inc. (FCR/TSX)

This real estate developer and operator has a market cap of $4.1 billion. Its dividend yields 4.5%, and it trades at 18 times earnings, with a one-year return of 14%.

In its last quarter, per-share earnings dipped to 18¢ from 20¢, but the dip was largely due to market value adjustments impacting its accounting earnings.

The company raised its dividend in July and insiders directly own 1% of the stock, but a related company with common directors owns 44%.

Interesting tidbit: The majority of First Capital’s shopping centres are anchored by food and drug stores, which provides good stability. Earnings barely changed during the financial crisis.

Descartes Systems Group Inc. (DSG/TSX)


This $1.3-billion company provides supply chain management software, with a key focus on delivery-intensive and transportation companies.

It doesn’t have a dividend, but its shares trade at 24 times earnings and have risen 20% in the past year, hitting a new high on Tuesday.

In its last quarter, a record-setting one, revenue rose 11%, cash flow increased 30% and net income jumped 91%. The company currently holds more than $150 million in cash.

Interesting tidbit: Descartes customers, being largely transportation focused, will likely have a lot of excess cash this year from lower oil and gas prices. Maybe they will spend it on new software.

Fiera Capital Corp. (FSZ/TSX)

Fiera is an $832-million market cap company, down 7% in the past year. Its shares trade at 15 times earnings and the company pays a dividend, which was increased last August, of nearly 4%.

Assets under management grew 3% in Fiera’s last quarter, while fees and other revenue increased slightly, but adjusted earnings before taxes and interest rose 50% and per-share earnings more than doubled.

Insiders, including parent company National Bank of Canada, own 52% of the company.

Interesting tidbit: Despite being one of Canada’s largest fund companies, it is virtually unknown to individual investors, at least as far as its stock goes. It has grown rapidly with acquisitions and recently expanded into the U.S.

Concordia Healthcare Corp. (CXR/TSX)

Concordia owns and markets pharmaceutical products, and is now — after a 478% gain in the past year — a $1.4-billion company.

It is vying to be the next growth company in the Canadian health-care space, and is off to a great start. It trades at 36 times earnings and pays a dividend of 0.74%. Insiders own 10%.

In its last quarter, revenue rose 147%, EBITDA jumped 137% and net income nearly doubled. As a result, it’s easy to see why the stock has been moving.

Concordia is growing via acquisitions, and its last deal was buying the drug Zonegran (an epilepsy drug) for $90 million.

Interesting tidbit: Investors who bought into Concordia’s December 2013 financing at $6.25 per share have seen their shares rise nearly eight-fold in 13 months.

There’s no way of telling whether these five companies will do well in 2015, but at least they won’t be seriously hurt by the price of oil.



Login to post a comment.

No comments have been posted yet.