Globe Megastar stocks - Nice to see Corus on this list Have cut and pasted the Globe and Mail Megastar stocks for this year
Megastar stocks
Air Canada (AC) returns to our Megastar list for the third year in a row. The stock gained 22% over the past year and a total of 105% since it first became a Megastar stock. Air Canada runs the largest airline in the land from its headquarters in Montreal and flies customers to more than 220 destinations on six continents. Hopefully the firm’s strong momentum will continue well into 2020.
Capital Power (CPX) is a power producer based in Edmonton that owns 5,100 megawatts of power generation capacity at 25 facilities in North America. The firm trades at seven times cash flow and pays a hefty indicated dividend yield of 5.8%. Income investors will cheer management’s plans to boost the dividend by 7% per year for the next three years.
Cogeco Inc. (CGO) is based in Montreal and controls cable company Cogeco Communications (CCA) via ownership of 32% of its equity shares. The parent also has a small media arm that operates 22 radio stations in Quebec and one in Ontario. Practically speaking, investors should hold either Cogeco or Cogeco Communications. At this point, the parent company trades at 10 times earnings and offers a slightly better value.
Cogeco Communications (CCA) is a cable company based in Montreal that conducts business in Quebec, Ontario and in 11 states along the east coast of the U.S. The firm trades at 12 times earnings and pays a 2.5% indicated dividend yield.
Corus Entertainment (CJR.B) is a Toronto-based media company with 44 specialty TV channels, 15 TV stations and 39 radio stations. It trades at 3.5 times its fiscal 2018 free cash flow and pays a 4.1% dividend yield. The Shaw family controls both Corus and Shaw Communications (SJR.B).
Empire Co. (EMP.A) is best known as a food retailer that hails from Stellarton, Nova Scotia. Its Sobeys subsidiary operates more than 1,500 food stores and more than 350 retail fuel locations across Canada. Empire also owns a 41.5% interest in Crombie REIT (CRR.UN), along with other real estate investments and partnerships. While Empire hit a rough patch in 2016, it has recovered nicely and gained 23% over the past 12 months.
Enerflex (EFX) supplies natural gas compression, gas processing, refrigeration systems and electric power generation equipment. While the firm makes its home in Calgary, in 2018, 58% of its revenues came from the U.S., 18% from Canada and the remainder from abroad. Its stock gained 22% over the past year and is nearing a 10-year high.
Equitable Group (EQB) provides financial services across Canada through Equitable Bank. The Torontobased firm trades at 91% of book value and seven times earnings. While it pays a relatively modest indicated dividend yield of 1.8%, it has increased its dividend payments frequently over the past eight years.
Exchange Income (EIF) is an acquisitive aerospacefocused conglomerate based in Winnipeg. While the firm has been subject to pressure from short sellers, industry analysts are keen on its prospects. It currently pays an exceptionally large dividend yield of 6.7%, which is just covered by its earnings yield of 6.9%.
Gibson Energy (GEI) is an integrated midstream company based in Calgary. It has two oil terminals in Alberta and nearly 12 million barrels of storage capacity. While the company lost money in 2015 and 2016, it has recovered since then, with its stock jumping 50% over the past 12 months. Despite the recent advance, Gibson pays a hefty dividend yield of 5.9%.
Magna International (MG) is another company to make the Megastar list for three years running. The auto-parts maker based in Aurora, Ontario, has climbed 14% since it was added to the team. Magna grew its sales by 11% over the last four quarters and its earnings by 5% while trading at just eight times earnings. It also managed to reduce its share count by 9% over the same period.
Martinrea International (MRE) is another Megastar alumnus, with its third five-star award. While the auto-parts firm’s stock has fallen by 15% since last year, it climbed by 31% in its prior outing. Martinrea makes its home in Vaughan, Ontario, and trades at six times earnings and four times cash flow.
Morguard Corp. (MRC) is a real estate investment company based in Mississauga. Its publicly listed subsidiaries are Morguard REIT (MRT.UN), Morguard North American Residential REIT (MRG.UN) and Temple Hotels (TPH). The firm and its subsidiaries own 214 properties across North America. Morguard Corp. trades at seven times earnings and has reduced its share count by 5% from last year.
The North West Co. (NWC) is a retailer in underserved and remote communities in Northern Canada, Western Canada, Alaska, the South Pacific islands and the Caribbean. The Winnipeg-based firm sold almost $2-billion worth of goods over the past 12 months. It trades at 0.8 times sales and pays a 3.9% dividend yield.
Parex Resources (PXT) makes its home in Calgary, but explores and produces oil in Colombia. The firm grew its revenues by 66% to $1.3 billion in 2018, while generating profits of $522 million. It trades at six times earnings, four times cash flow and has a strong balance sheet with no longterm debt.
Power Corp. of Canada (POW), the Montreal-based financial conglomerate, has a 65.5% interest in wealth management firm Power Financial (PWF), which itself has a 67.7% interest in insurer Great-West Lifeco (GWO). All three firms made it into this year’s Megastar list. Power Corp. also has a sprawling list of international operations. It offers a dividend yield of 5.3% and recently announced a hefty share repurchase program, which helped lift its stock.
Power Financial (PWF) is the main arm of Power Corp. The Montreal-based firm owns 67.7% of Great-West Lifeco and 61.4% of money manager IGM Financial (IGM). Power Financial pays a 5.8% indicated dividend yield, trades at 11 times earnings and also recently announced a big share repurchase plan.
Great-West Lifeco (GWO) of Winnipeg is the health and life insurance arm of Power Financial (PWF). It trades at 10 times earnings, pays a 5.3% indicated dividend yield and has a big share buyback plan in the works.
Quebecor Inc. (QBR.B) is a cable and media company based in Montreal. Its telecom operations generated the vast majority of its revenues and profits over the past year. It trades at five times cash flow and sports strong momentum, with one-year gains of 29%.
Rogers Sugar (RSI) refines and sells a range of sugars, and it recently added maple syrup to its lineup. The Vancouver-based firm is the smallest Megastar this year, with revenues of $807 million and a market cap of $639 million. But it offers income investors a sweet dividend yield of 5.9%.