The Toronto Stock Exchange released its 2024 TSX30 ranking on September 10, 2024. This annual list highlights the top 30 performing companies on the TSX over a three-year period based on dividend-adjusted share price performance. Key sectors represented in this year’s list include oil and gas, industrial products and services, and mining.
The companies were chosen based on share price performance and market cap limitations, with a minimum market cap of CAD$75 million.
Chris Birkett, the vice president of the TSX, noted a few of the more common trends on the exchange over the years in an interview. These included the heavy amount of cannabis stocks in 2019 and 2020, and the transitional shift to tech plays in 21-22 and now into energy.
The latest trend, he says, is a move away from growth stocks and more towards value stocks.
“I think it may be almost exactly two thirds of list are dividend paying companies, and the yield on those dividends is just under 3 per cent. That is up from prior years,” Birkett said.
Investors are foregoing growth stocks for dividend paying stocks to ensure that they have income coming in.
Mining has always been strong as well.
“I think we are resource exchange, frankly. So we’ve always had a really pretty significant contingent from the mining sector,” he said.
And that’s reflected in the top five with two of the five being resource plays.
Here are the top five performers on the Toronto Stock Exchange from this year.
1. Hammond Power Solutions outperforms everyone
Hammond Power Solutions Inc. (TSE: HPS.A) is a leader in custom electrical magnetics and transformer manufacturing. It’s also seen its stock value skyrocket on the Toronto Stock Exchange by approximately 928 per cent over the past three years.
Several factors contribute to this impressive rise.
Hammond expanded its production capacity significantly across North America, especially in the United States and Mexico, where it generates a large portion of its revenue. This expansion wasn’t merely about boosting output, though. It was a calculated move to meet rising demand for energy-efficient and reliable power solutions.
The demand for Hammond’s products has grown as the world shifts towards renewable energy sources and smart grids.
The company has also put up strong financial numbers. Over the past three years, it reported a 47 per cent year-over-year sales increase in 2022, accompanied by a remarkable 195 per cent surge in earnings. It accomplished this through effective cost controls despite volatile material and freight expenses, which led to strong profit margins.
Innovation has been a key part of Hammond’s growth. The company diversified into new product lines like power quality and induction heating, targeting niche markets that were previously underserved. It’s acquisition of the Mesta business further expanded their product offerings, strengthening their presence in specialized applications. This diversification reduced risk and opened new revenue streams, contributing to the company’s rising stock value.
The intangibles also worked into Hammond’s favour. These being the shift away from coal-fired power plants, exemplified by closures like the Bruce Mansfield Power Plant. This and others have pushed the U.S. energy industry towards more sustainable solutions and Hammond is ideally positioned to capitalize on this transition.
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2. Celestica Inc rides the wave of tech innovation
Celestica Inc. (TSE: CLS) takes number two on the Toronto Stock Exchange top 30 list and with good reason.
First, it’s a global leader in design, manufacturing, and supply chain solutions for technology hardware. It’s also experienced a 706 per cent rise in its stock over the past three years stemming from strategic decisions, technological innovation, and evolving market trends.
Celestica has capitalized on the increasing demand for cloud computing, artificial intelligence (AI), and advanced data centers. The company’s expertise in manufacturing high-speed digital nodes for data centers and telecom infrastructure has placed it in an ideal position. By scaling production for 800G network switches and storage solutions like the SC6100 controller, Celestica has directly catered to sectors like AI and big data analytics.
Celestica’s dedication to innovation has also driven its success. The company’s advancements in silicon photonics and optical solutions have been critical, with technologies like on-board optics and co-packaged optics meeting the industry’s need for faster, more energy-efficient data transmission. These innovations satisfy current market demands and also ensure that Celestica’s offerings remain relevant as data bandwidth and efficiency grow in importance.
On the financial side, Celestica has consistently outperformed expectations, with revenue surpassing forecasts and earnings surprises becoming a regular occurrence. Investors are confident in Celestica’s future, driven by the company’s investment in artificial intelligence and machine learning solutions, which are seen as key to the future of computing.
The company’s global expansion is really the catalyst for the company’s success.
By extending operations to regions with lower costs and high skills, such as Mexico and Asia, Celestica has increased its profitability. This strategic expansion has allowed the company to tap into new markets while improving operational efficiency by reducing costs without sacrificing quality.
3. Athabasca Oil Corporation leverages economies of scale
Athabasca Oil Corporation (TSE: ATH) takes up the third spot on this list, with a 429 per cent stock value surge over the past three years. It’s is a Canadian energy company that focuses on the development and production of thermal oil and light oil assets.
Operating primarily within Alberta’s Western Canadian Sedimentary Basin, the company produces oil from both conventional oil reserves and oil sands. It uses advanced extraction technologies to tap into thermal oil reserves (primarily bitumen from oil sands) and light oil, aligning its operations with both traditional energy markets and emerging energy transition trends. Athabasca’s key projects include sites in the Greater Kaybob and Athabasca regions, making it a significant player in Alberta’s oil industry.
Athabasca’s strategic decisions have driven its financial ascent.
The company has increased its production output through technological advancements in oil extraction, particularly in its oil sands operations. Expanding its operational footprint with key projects in the Greater Kaybob and Athabasca regions has allowed the company to achieve economies of scale, improving operational efficiency and profitability.
Financially, Athabasca has demonstrated strong performance, with significant growth in both revenue and net income. The company’s ability to manage costs effectively, especially in an industry known for high operational expenses, has boosted profitability. Rising oil prices have further enhanced these financial results. Athabasca’s net income and earnings per share have shown substantial year-on-year growth, reflecting its strong stock performance.
The energy sector’s inherent volatility, largely due to oil price fluctuations, has historically impacted companies like Athabasca. However, the past three years have seen a favourable oil market, with prices recovering from previous lows.
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4. CES Energy Solutions Corp offers maximum shareholder value
CES Energy Solutions Corp (TSX: CEU) rounds out the second resource, oil and gas entrants onto this year’s Toronto Stock Exchange Top 30. Over the past three years, its stock price has risen by approximately 335 per cent, driven by key factors that have propelled its growth in the energy services sector.
CES Energy Solutions has focused on providing consumable chemical solutions for the oil and gas industry, covering every stage of oilfield operations, from drilling to extraction. The company’s strategic emphasis on innovation has played a critical role in its success. By developing advanced fluids and specialty chemicals, CES has positioned itself as a vital partner to oil producers, particularly in the Western Canadian Sedimentary Basin (WCSB). Its commitment to delivering efficient, environmentally responsible solutions has aligned with the industry’s shift toward sustainable practices, increasing operational demand for its services.
The company’s financial performance has been equally impressive, with strong growth in revenue, net income, and earnings before interest, tax, depreciation and amortization (EBITDA) often surpassing market expectations.
CES has benefited from both strategic operational decisions and favourable market conditions, such as the post-2020 recovery in oil prices and steady demand for oil and gas. By carefully managing costs while expanding its service offerings, the company has improved its profit margins, which has directly increased shareholder value.
Investor confidence in CES Energy Solutions has remained high, bolstered by favourable acquisitions, operational expansions, and the company’s sustainability focus. Although the energy sector is prone to volatility, CES has diversified its services to include environmental solutions, offering a safeguard against market fluctuations.
This diversification, combined with consistent dividend payouts and a 20 per cent increase in dividends in early 2024, has shown the company’s confidence in future earnings and made its stock more appealing to investors.
5. TerraVest Industries Inc diversifies to triple-digit success
TerraVest Industries Inc. (TSE: TVK) manufactures and distributes equipment primarily for industries such as energy, agriculture, and transportation. It produces a wide range of products, including pressure vessels, propane storage tanks, and processing equipment for the energy sector, as well as products used in fuel containment and storage.
The reason why it’s ranked so highly on the list is fairly simple. Over the past three years, the company has seen its stock price rise by approximately 289 per cent with several contributing factors to this substantial increase in stock value.
TerraVest Industries has strategically diversified across multiple sectors, including energy, agriculture, mining, and transportation, primarily in Canada and the United States. This diversification has played a key role in its success, allowing the company to reduce risks from economic downturns or sector-specific challenges.
The company has also tapped into stable markets like home heating and cooling equipment, compressed gas systems and energy processing tools.
Its focus on improving operational efficiency has been another critical factor. Through investments in technology and process optimization, TerraVest has reduced costs and enhanced product quality. This operational excellence has boosted profit margins and positioned the company to respond quickly to market demands, strengthening its competitive advantage.
The energy sector has been volatile in 2024, and the company’s adaptability has helped it set itself apart. By diversifying into less volatile areas such as natural gas and renewable energy, the company has mitigated risks from fluctuating oil prices. TerraVest’s operations in other sectors, including agriculture and mining, have also provided stability, allowing it to capitalize on optimal market conditions while avoiding severe downturns.
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joseph@mugglehead.com