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NUMBER CRUNCHER

Fourteen Canadian stocks with healthy profit margins and zero debt Add to ...

What we are looking for?

Canadian companies that have healthy profit margins and zero debt. This could appeal to you if you are very risk-averse and don’t like the idea of potential dividends going toward interest payments. It could also mean that these companies are missing out on the chance to borrow on the cheap, while interest rates are low, and are turning their backs on growth, acquisition and expansion opportunities.

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Our list is ranked according to how these companies’ shares have performed over the past five years. All data courtesy S&P Capital IQ.

What we found

Some of the names on the list have been famously debt-free for years, such as BlackBerry Ltd. It is also the biggest loser, when it comes to stock performance.

The biggest gainer of all is Lululemon Athletica Inc., with a 527 per cent price gain over the past five years, and a 30 per cent profit margin over the past year. It is followed by Winpak Ltd., a Winnipeg-based company that makes plastic packaging, such as those used for single-serve coffee cups and condiments. It is highly rated and held by many small-cap fund managers and investors who seek to avoid volatility.

Exco Technologies makes dies, moulds and components for the automotive industry and aluminum extrusion machines. Thomson Reuters StockReports+ gives it a score of nine out of 10, placing it within the top 15 per cent of stocks scored. The company also made our rankings of Canada’s Top 1000 companies as a bargain stock that has raised its dividend by 125 per cent over the past three years.

Many of the companies on the list operate in the cyclical energy and resources sector, such as Alamos Gold, Franco-Nevada, Gran Tierra Energy, Pason Systems, Akita Drilling, Semafo Inc. and Silvercorp Metals. Defensives are better represented by stocks such as Corby Distilleries Ltd., which owns Wiser’s Canadian Whisky and Polar Ice vodka and earns commission income by representing alcohol brands such as Chivas Regal, Glenlivet and Kahlua.

As always, please do your own research before deciding to trade any of these stocks.

 

Zero-debt companies that are reasonably profitable

Company Ticker Total
Enterprise
Value
[Latest]
($US-mil)
EBITDA
Margin
% [LTM]
Lululemon Athletica LULU-Q 9,328.9 30.2
Winpak Ltd. WPK-T 1,085.1 19.3
Exco Technologies XTC-T 228.2 17.7
Jean Coutu Group PJC.A-T 3,733.9 11.9
Alamos Gold AGI-T 1,393.3 64.9
Franco-Nevada Corp. FNV-T 5,417.8 81.6
SEMAFO Inc. SMF-T 352.8 47.3
Pason Systems Inc. PSI-T 1,388.6 42.6
Gran Tierra Energy GTE-A 1,515.7 69.0
Corby Distilleries CDL.A-T 475.6 28.9

July 31 closing prices are in Canadian dollars, except Lululemon and Gran Tierra, which are in U.S. dollars. Source: S&P Capital IQ

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