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Summary
- The Toronto Stock Exchange Venture has traditionally housed some great Return on Equity (ROE) stocks.
- GreenPower Motor (TSXV:GPV), Olivut Resources (TSXV:OLV), and Decklar Resources (TSXV:DKL) are three stocks that have emerged as the top RoE performers across the TSX and the TSXV this year.
- ROE is a key metric to analyse stock performance and profitability.
The coronavirus pandemic has upended the equity markets, forcing top stocks to take a backseat and thrusting forward a new crop of performers. In the hullabaloo that followed the March pandemic-led market crash, precious metals (gold) and technology stocks grabbed the centerstage, emerging as investors’ favourites. Traders also sought out high Return on Equity (ROE) stocks, a key metric to analyse stock performance and profitability. The Toronto Stock Exchange Venture (TSXV), the breeding ground for young, upcoming and small companies, has traditionally housed some great RoE stocks. Lately, GreenPower Motor (TSXV:GPV), Olivut Resources (TSXV:OLV), and Decklar Resources (TSXV:DKL) are three stocks that have emerged as the top RoE performers across the Toronto Stock Exchange (TSX) and the TSXV over the past 52 weeks.
Before taking a detailed look at these three stocks, let us understand what is Return on Equity (ROE). The RoE of a stock is recognized as the return on net assets, and helps investors understand the income generated by a business relative to shareholders’ equity.
Let us a take a detailed look at the three leading RoE stocks:
Decklar Resources Inc. (TSXV:DKL)
DKL Current Stock Price: C$ 0.31
Sector: Energy
Industry: Oil & Gas
Decklar Resources RoE (Trailing Twelve Months or TTM) stands at 31,343.1 per cent, as per data on the TSX site. The C$ 16 million-company has a price-to-book ratio of 31 and price-to-cash flow ratio of 160.70.
Decklar Resources, earlier known as Asian Mineral Resources, is an oil and minerals development company exploring in the West African region. The company recently acquired Nigerian-based Decklar Petroleum Limited, which has interests in the stacked sands reservoir, Oza Field. Its sole asset is the Risk Service Agreement (RSA) with Millenium Oil and Gas Company Limited on the Oza Field. A new central production facility with 15,000 boe/dcapacity is also in the pipeline.
Earlier this month, the company announced 2.825 million share options to certain organisation directors and officers, at a price of C$ 0.28 per share for a period of five years (expiring September 3, 2025). In August, the company announced a preliminary funding of US$ 26 million to develop and restart of production at its Oza Oil Field in Nigeria.
Decklar also operates the Holt Property on Vancouver Island, British Colombia. Its shares are down 400+ per cent YTD. However, in the last three months, the scrips have gained 100 per cent.
Olivut Resources Ltd. (TSXV:OLV)
OLV Current Stock Price: C$ 0.05
Sector: Basic Materials
Industry: Metals & Mining
Olivut Resources’ RoE (TTM) is an eye-popping 28,771.57 per cent, as per data on TSX. Shares of this Canadian diamond and precious mineral exploration company are down nearly 17 per cent YTD. Following the pandemic-led market crash, Olivut shares have grown by 25 per cent in the last six months. The stocks surged by nearly 67 per cent in the last three months, indicating a momentum in its relative price performance.
The C$ 2.8 million-mining company is exploring HOAM Project in the Interior Plains region of Northwest Territories in Canada. In July, Olivut Resources announced a 50-50 partnership with Talmora Diamond Inc over earnings from the Seahorse Project. In a statement providing update, Olivut said that it has concluded planned drill program’s field portion on the Seahorse Project.
The company’s drilling work was halted due to the current COVID-19 pandemic, which reflected in its latest quarter report.
In its third quarter financial report (ending July 31, 2020), the company’s net loss narrowed to C$ 84,998 from C$ 0.27 million in the same quarter last year. The company ended the quarter with cash balance of $100,911 and accrued liabilities of $1 million.
The company is looking at additional financing sources, since “low level of investor interest for equity financing” currently exists for junior exploration companies, it said in a statement.
GreenPower Motor Company Inc. (TSXV:GPV)
GPV current stock price: C$ 18.54
Sector: Consumer Cyclical
Industry: Vehicles & Parts
Shares of heavy-duty electric-vehicle manufacturer GreenPower Motor escaped the scratch of the coronavirus pandemic, surging over 845 per cent year-to-date (YTD). In the last three months, the stock advanced by a massive 488 per cent. The scrips increased by 89 per cent in the last one month.
GreenPower Motor concentrates on the North American markets, with a special focus on electric buses. GreenPower produces and distributes high-floor and low-floor vehicles, including transit and school buses, double-deckers, shuttles, and cargo vans. Its flagship product is called EV Star.
As per data on the TSX site, GreenPower Motor’s has the third highest return on equity across the TSX and the TSXV. Its RoE (TTM) is a whopping 28,302.26 per cent. The 30-day average trading volume for GPV stock is 0.24 million. The company is currently valued at C$ 346 million.
It completed the delivery of 68 buses, generating $13.5 million revenue with a gross profit of $4 million in the year ending March 21, 2020.
For its first quarter fiscal year 2021 (ending ended June 30, 2020), the company revenue touched US$ 2.27 million and generated a gross profit of US$ 0.618 million. It ended the quarter with US$ 0.31 cash and restricted cash balance stood and US$ 0.7 working capital.
GreenPower Motor reported insider purchases of 300,000 shares in the past one year (as of September 2020).
The EV manufacturer announced US initial public offering (IPO), at a price of US$ 20.00 per share, to raise gross proceeds of US$ 37.2 million on September 1. The stocks are trading on the Nasdaq under the symbol “GP.” The net proceeds will be used to fund production of all-electric vehicles.
