It’s been six weeks since we looked at three lesser-known companies, so let’s take a look at how they have performed.
When we first looked at AutoCanada (TSX: ACQ), it was trading at $55.69 and was enjoying a skyrocketing stock price on the heels of several acquisitions. To refresh, AutoCanada is a publicly traded automotive dealership network. It is currently one of the country’s largest dealership groups, with 32 locations in six provinces. Two of its largest competitors are the privately held Dilawri Group with 46 dealerships and the Jim Pattison Auto Group with 22 dealerships.
Since the end of March, AutoCanada has announced a new deal to purchase another eight locations, putting it just six locations behind the largest dealership group in the country. It’s on track to overtake Dilawri soon; AutoCanada is expecting to add an additional 10 to 12 more dealerships in the next two years. Growth for the company has come from purchasing locations from dealership owners who are reaching retirement age and are looking to exit the industry.
The stock has tripled over the past year and closed Friday at $71.05, an increase of $15.36 per share since March 24. Price targets for the stock are around $71 with a buy recommendation.
Second on our list of hidden gems is Methanex (TSX: MX)(NASDAQ: MEOH), which was trading at $74.20 on March 24. The sole purpose of the company is the production of methanol. It is currently the world’s largest producer and supplier of methanol to the major international markets, as the company sold 7.9 million tonnes of methanol in 2013, up from 7.4 million tonnes in 2012.
Revenues took a nice jump from 2012’s $2.543 billion, reaching $3.104 billion in 2013. Net income also saw an impressive improvement with $329 million in 2013, up from a $68 million loss in 2012. For Q1 2014, Methanex’s adjusted net income came in at $160 million ($1.65 per share) down slightly from Q1 2013 where adjusted net income was $167 million ($1.72 per share). The losses are attributed primarily to increased costs of natural gas and oversupply of methanol in South Asia.
The stock closed at $66.00 on Friday, a loss of $14.20 per share since March 24. This is a far cry from its 52-week high of $81.24 on March 7. On a positive note, Methanix has recently increased its dividend by 25% to $0.20 per quarter. Also, a $42 million settlement from its Argentina gas supplier (which couldn’t meet its demands) will give the company the chance to realign its South American operations.
The last company on our list is Stella-Jones (TSX: SJ), it was trading at $30.75 back on March 24. For those unfamiliar with the company, it is a producer and marketer of industrial treated wood products, such as railway ties, power line poles, construction timbers, and foundation pilings.
Back in March the company had just announced the purchase of Boatright Railroad Products, where it received 24 wood treating plants, 10 pole peeling facilities, and a coal tar distillery. The company followed up this announcement with a 40% increase to its quarterly dividend bringing it to $0.07 per share.
Six weeks later, Stella-Jones has released its Q1 2014 results, in the quarter, sales rose 15.7% over Q1 2013 to $257.5 million, continuing its 13 consecutive years of growth. Net income also rose by 20% to $22.5 million or $0.33 per share, this is quite the accomplishment for the company which was hindered by a severe winter. These results have led to an increase in many analysts price targets for the company now set at $35.00, the stock closed Friday at $30.99.
It pays to look off the beaten path
For investors sometimes going beyond the popular stocks can be a way to set your portfolio apart from the others. The added risk has the potential to reap higher rewards as these little known companies are still in the process of growing, some faster than others.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Cameron Conway does not own any shares in the companies mentioned.