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Summary
- Due to forced restrictions and lockdowns, industrial operations got hit in 2020.
- With economic regrowth in sight, chances are that the industrial stocks may perform well this year.
- We look at two industrial players, who overcame all odds and have been able to churn attractive returns for investors.
Ever since the outbreak of coronavirus, countries not only dealt with a public health crisis but also had to concentrate on saving themselves from an economic meltdown. Due to forced restrictions and lockdowns, industrial operations got hit. As a result, uncertainty loomed over the Canadian economy for almost a year. Reductions in income, rise in unemployment and major disruptions in manufacturing industries have cumulatively impacted the economy and the entire financial ecosystem.
The country is now showing signs of recovery as industries are restoring normalcy. It is very likely that as the economy grows, the industries will thrive this year. Since the industrial sector is strongly correlated with the economic performance of a country, chances are that the industrial stocks may perform well this year and now might be the time to look at some of these stocks for a long-term gain.
In this article, we bring you two industrial stocks you might lookout for long-term gains:
Canadian Pacific Railway Limited (TSX:CP)
Established in 1881, the Canadian Pacific Railway Limited (CPR) has one of the biggest rail networks in Canada. It owns around 20,100 kilometres of a track that runs through six Canadian provinces and also the US. Apart from transportation, CPR also offers supply chain service and has access to eight major ports and key markets in North America.
CPR’s one-year stock performance chart (Source: Refinitiv)
The company has a market cap of over C$ 64 billion and offers a 34.33 per cent return on equity. It also holds a price-to-book (P/B) ratio of 8.76. The stock prices grew up by 80 per cent in a year and ~9 per cent year-to-date (YTD).
The company achieved a net income of C$ 802 million in Q4 2020, up by 20 per cent in Q4 2019. The diluted earnings per share (EPS) improved to C$5.95, 23 per cent up from Q4 2019.
Stantec Inc. (TSX:STN)
Headquartered in Edmonton, Stantec Inc is a multinational engineering and construction company. It operates mostly in North America and works in 350 different locations. The company’s revenues come majorly from the US and Canada.
The stock prices grew 58 per cent in a year and 30 per cent YTD. The company has a market cap of over C$ 5 billion and it offers a 9.09 per cent return on equity.
Stantec’s one-year stock performance chart (Source: Refinitiv)
The cash flows from operating activities were at C$ 602.6 million, up by almost 34 per cent year-over-year. However, the company's net revenue was C$ 861.7 million in Q4 2020, down by 4.6 per cent from Q4 2019.
The company offers a quarterly dividend of C$ 0.165 and has a dividend yield of 1.2 per cent.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view.
