Steve Hudson is pictured in front of a truck he financed in Toronto in 2011. Mr. Hudson’s Element Financial Corp. is listed as a “rookie of the year” on Report on Business magazine’s ranking of the top 1000 most profitable companies.J. P. Moczulski/The Globe and Mail
Visit this year's Top 1000 rankings of Canada's most profitable companies and find more tables, multimedia and analysis in Report on Business's full Top 1000 section.
By the time some companies make the Top 1000, they may already be in the doghouse with shareholders. We're talking mainly about new commodity (read: gold) concerns that skid soon after their IPOs. Other companies return to the ranking after they've spent a year or two in the minor leagues—often because they sank below the minimum asset level required to make the list. But carefully screening companies that weren't ranked last year can be a great way to find future winners. Our picks of this year's litter:
No. 407—Mosaic Capital Corp.
This growing conglomerate was built for dividends. Calgary-based Mosaic scours Western Canada for high-return, private businesses that it can take a majority stake in, and often leave the founding entrepreneurs with a small slug of stock and the keys to the corner office. Mosaic's capable managers are all shareholders, and they've bought firms in several industries, including mechanical contracting and waste-water treatment. So far, so good: Mosaic's revenues climbed 29% in the first quarter of 2013 and operating income was up 91%. Investors also get a dividend (yield: 1.7%). Add in prospects for buying more businesses from aged baby boomer owners who want to cash out or semi-retire, and there's still plenty of upside.
No. 623—Apogee Silver Ltd.
Get your bling on the cheap. Apogee can be considered a "near-producer" because its Pulacayo-Paca deposit in Bolivia has 95 million ounces of silver, has gone through a preliminary study and already produces small batches. The company has completed a financing in which insiders—down to the mine manager—participated. That's almost unheard-of in this business. So what do you pay to buy silver in the ground by investing in Apogee's stock? About 15 cents an ounce. Many full-fledged producers trade for about $4 per ounce, and near-producers for $1 to $2. Eventually, Apogee's discount will be recognized, and its share price will climb. And Apogee's chairman is Scott Paterson, the hard-driving head of Yorkton Securities in the late 1990s, who certainly displayed a flair for getting new issues to market, but then was fired and paid $1 million to settle an Ontario Securities Commission investigation into conflict of interest.
No. 412—Summit Industrial Income REIT
There are plenty of REITs out there, but one class of real estate is severely under-represented in REITland: industrial property. That's starting to change: industrial tenants are resilient and used to paying for their own leasehold improvements. This one—call it Son of Summit—is run by Lou Maroun and Paul Dykeman, who built and sold the original Summit Industrial REIT for more than $3 billion. They're back for a second kick at the gilt can. Investors who missed out the first time can tag along.
No. 699—Element Financial Corp.
Steve Hudson, master of the leasing game, is back after a hiatus that saw him move to Florida and take over the Hair Club for Men. The first time around Hudson took investors on a wild ride with Newcourt, which grew rapidly, floundered somewhat, then got bought by CIT. This time, a chastened Hudson will apply what he learned from his first experience to make the ride a little smoother as he grows aggressively by acquisition. In theory, that is.
No. 493—Rifco Inc.
Lending money to borrowers with bruised credit so they can buy new or used cars may sound like a sure way to get head trauma, but Rifco seems to have the formula about right. The Alberta-based concern has finally achieved that holiest of holy grails: economies of scale. And it's recently renewed several credit facilities that will be a much cheaper source of capital for its loans. Investors are happy.
The Top 1000 rankings in ROB Magazine and this website only provide a limited snapshot of data for the top 1000 companies in Canada. The most comprehensive database of Canadian corporate financial information is available for purchase in spreadsheet format here. This year we have improved on what we have offered in previous years in two separate packages based on whether your needs are research or sales prospecting. Find in-depth financial and contact information, total compensation for every CEO on the Top 1000 and more.
An earlier version of this story incorrectly stated that Rifco Inc. places starter interrupters in its borrowers' cars. Rifco has never used starter interrupter technology. The item also described Rifco's borrowers as "the working poor." The average annual income of a Rifco borrower is $55,000 and less than 5 per cent of the company's loans default.