Here’s a shocker: a transportation company is one of the Toronto Stock Exchange’s top performing stocks this year.
That’s not a knock against TransForce Inc. , whose stock has been a star performer. It’s just that usually the top 10 lists of best and worst performing companies are chock full of resource and mining names because the industries are so inherently volatile. Yet there TransForce is, sitting at number six, sporting a 31 per cent gain since January 1.
Better still, since a near-term low of $10.10 on October 3, TransForce’s stock is up almost 70 per cent. And unlike some firms, which have rallied of late but are way off their pre-crisis highs, TransForce has surpassed its 2007 levels and is closing in on its 2006 high near $19.50.
Driving all this: a shift away from cyclical businesses and a smart acquisition strategy. As analyst Cameron Doerksen at National Bank Financial notes, in the last economic downturn about 65 per cent of TransForce’s revenue came from economically-sensitive trucking divisions. This year, he estimates that about 60 per cent of revenue will come from the less-cyclical package and courier business and specialized services.
TransForce has also been growing by acquisitions. The latest two were purchases of Quik X, for less than $50-million, and rig hauler I.E. Miller, for $110-million (U.S.). Acquisitions obviously help the company to bulk up, and now even in a slow-growth, or a no-growth, market, NBF predicts that TransForce’s 2012 revenue will pop 22 per cent.
After such a big run, there’s reason to be cautious, and Mr. Doerksen notes that it's probably worthwhile to wait for a pullback before you buy in. But those who got when the stock when it was depressed must be laughing now.
It’s also worth mentioning that oddly enough, another non-resource, non-mining stock has also cracked the top ten list of best performing stocks. Manufacturer Linamar Corp. is up 29 per cent since the start of the year.