What we're looking for
Canadian companies with zero debt.
With just over a week to go to Christmas, 'tis the season to be thinking about spending - and debt. Interest rates are low, and bills have to paid. Why not borrow?
And so today, we're looking at Canadian companies that have resisted the urge to go into debt.
Of course, zero debt is not necessarily a good thing. Borrowing hands a company the power of making someone else's money work for shareholders. Debt is often a less expensive form of financing than equity because it carries less risk.
The upside of being debt-free is that shareholders don't have to worry about onerous debt-servicing costs or standing in line behind lenders, in case the company goes under.
What we found
We ran a Capital IQ screen for Toronto Stock Exchange-listed companies with a total enterprise value greater than $50-million and total revenue of more than $100-million, and with zero total debt.
It makes sense that companies without large capital outlays, such as software companies or those in the services sector, would be the least indebted. But some of the names on the list - miners, such as Centerra Gold Inc. and Franco-Nevada Corp. , and retailers, including Lululemon Athletica Inc.and Leon's Furniture Ltd. - were a revelation.