This stock has returned an average of 50% a year for the past decade - and is still a top rated name on the TSX

An unlikely company can claim the title of best-performing Canadian stock over the past 10 years.

Boyd Group Income Fund, which started out replacing windshields in Winnipeg in 1990, has transformed itself into one of the premiere growth stocks on the Toronto Stock Exchange.

Over the past decade, Boyd’s shares have increased by nearly 5,000 per cent – or roughly a factor of 50 – making it the top performer in the S&P/TSX Composite Index over that time. After accounting for dividends, Boyd’s stock has returned an average of more than 50 per cent, every year, for 10 years.

Granted, Boyd’s low starting point back in 2009 has a lot to do with those astronomical returns.

But even after the big gains posted in the early years after the global financial crisis, the stock continued on a steep upward trajectory, as the company has manoeuvred through the fragmented collision repair industry in North America with a potent mix of acquisitions and growth from within.

“You want that combination,” said Teal Linde, president of Linde Equity, a Vancouver-based investment advisory. “A lot of growth strategies ultimately fail because there’s just too much dependence on doing acquisitions.”

That balanced formula continues to deliver for Boyd, which has an abundance of takeover targets, while the rising cost of repairing increasingly sophisticated vehicles helps to drive organic growth.

By the time the global financial crisis erupted in 2009, Boyd’s shares didn’t have much left to lose. Plagued by operational issues and excessive debt, the company was reduced to penny-stock status in 2006 when the federal government announced a change to the way income trusts were taxed.

After Brock Bulbuck took over as chief executive in 2010, the company’s fortunes began to change and its consolidation strategy began to take shape.

Fast-forward to today: Boyd has more than 600 locations in 27 U.S. states and five Canadian provinces. “It’s as good a management team as you’re going to find,” said Brandon Osten, chief executive officer of Toronto-based Venator Capital Management. “Because they have the ability to buy or build at roughly the same cost, they could never get pressured into paying too high a price.”

The company has also been careful not to dilute its shareholders with excessive share issuance. From the end of 2009 to the end of last year, share count rose by about 70 per cent, while revenue increased by about 730 per cent.

And yet, the company has not had to imperil its balance sheet to generate growth, with net debt to adjusted EBITDA of about 1.7 times as of the end of the first quarter, making Boyd “conservatively leveraged,” Desjardins Securities analyst David Newman said in a note.

Its major U.S. competitors, meanwhile, are either too indebted or, in the case of Caliber Collision Centers and Abra Auto Body Repair of America, which merged earlier this year, too preoccupied with integration to be active on the M&A market, Mr. Newman said.

The limits to Boyd’s growth don’t yet appear anywhere in sight. Despite a decade of steady expansion, the company’s market capitalization is still a modest $3.2-billion, while its U.S. store count is less than 2 per cent of the total market. “Boyd is well-positioned to capitalize on the strong M&A momentum,” Mr. Newman said.

Insurance companies have been helping to promote that consolidation, as they increasingly favour larger repair networks to help manage claims and drive efficiencies.

The average size of claims has generally been on the rise, meanwhile, as a result of increased technology in vehicles, such as crash avoidance systems. “Cars today, when they get into fender benders, there is a lot of safety equipment you have to repair, like cameras and sensors,” Mr. Linde said.

It all amounts to a compelling narrative, which has not been lost on Bay Street. Of the 12 analysts following the stock, all 12 rate it a “buy,” making Boyd one of the top-rated stocks in the index, as measured by Bloomberg’s consensus recommendations.

Considering that level of positive sentiment, combined with Boyd’s latest leg upward – its stock is up by 43 per cent year to date – prospective investors may want to consider waiting for a better entry point, Mr. Linde said.

“They just had a gangbuster quarter that got the market excited, but not every quarter is like that. You could wait for a pullback, and it’ll happen again at some point."