Cascades Inc. or Cargojet Inc.: Which Is the Better Buy?

Investors: looking for a new stock for your portfolio? Let’s compare the numbers for Cascades Inc. (TSX:CAS) and Cargojet Inc. (TSX:CJT) to see if one is a better buy for you.

packaging tape

On the lookout for a new investment? Let’s examine two companies that don’t have a whole lot of peers — Cargojet Inc. (TSX: CJT) and Cascades Inc. (TSX: CAS) — to see if one is the better buy.

Cargojet Inc.

Cargojet, based out of Mississauga, provides overnight air cargo service in Canada and across the globe.

Cargojet release second-quarter results in August and reported adjusted earnings of $0.39 per share, in line with analyst expectations. This beat last year’s second-quarter results by 8.33%. Cargojet’s net profit number only sits at 0.34%. Over the last three years, the company’s revenue growth has averaged 23.58% annually. Its earnings, however, have declined by an average of 18.91% annually over the last three years, so the company needs to get better at converting revenue to profit.

The stock has a huge trailing P/E ratio of 663.47, so buying this company’s earnings isn’t cheap. The company also has a high debt-to-net-equity ratio of 3.064, so this company is carrying three times more debt than equity right now.

The stock has a low return-on-equity number of 1.26%. Cargojet is also trading near its 52-week high of $52.56 right now. If you are an income investor, Cargojet offers a small dividend. Its annual declared dividend is currently $0.77 per share for a yield of 1.48%.

Cascades Inc.

Cascades, headquartered in Winnipeg, produces and converts tissue products and packaging using recycled fibres and has facilities across North America and Europe.

Cascades also released second-quarter results in August. The company reported earnings per share of $0.25. This missed analyst expectations of $0.29 per share and missed 2016’s second-quarter results by 34.21%. The company’s net profit number is healthier than Cargojet’s at 12.43%. Over the last three years, revenue growth has averaged only 5.89% annually. However, earnings over the last three years have grown by an average of 47.64% annually, so Cascades does a better job of converting revenue into profit.

Cascades has a much better trailing P/E ratio of 3.15, so it’s cheaper to buy the earnings of this stock than Cargojet. Cascade’s debt-to-net-equity ratio looks a little better at 2.24, but the company is still carrying a lot of debt.

The stock has a great return-on-equity number of 42.42%, much higher than the 15-20% analysts like to see. The stock is trading closer to its 52-week high of $18.20 than its 52-week low of $10.95. Cascades also offers a small dividend. Its annual declared offering is $0.16 per share for a yield of 0.98%.

Bottom line

Both stocks have some good numbers. Cargojet had a good second quarter and good revenue numbers over the last three years. However, it holds a lot of debt and has a high P/E number. Cascades missed expectations in its second quarter, but earnings growth looks good, and it has a low P/E. While both offer a dividend, neither is a dividend superstar at the moment. Analysts seem positive about the future of both stocks. If you are looking for a new investment for your Foolish portfolio, both of these stocks deserve a second look.

Fool contributor Susan Portelance has no position in any stocks mentioned.

More on Investing

coins jump into piggy bank
Bank Stocks

Thinking About Bank Stocks? Here’s What to Know in September

After a strong run so far this year, here’s what Canadian investors should know about the big bank stocks in…

Read more »

businessmen shake hands to close a deal
Investing

Carney’s Investment Summit: What Canadian Investors Need to Know

Here’s why Carney’s investment summit earlier this month could benefit high-quality TSX stocks for years to come.

Read more »

a-developer-typing-lines-of-ai-code-while-viewing-multiple-computer-monitors
Dividend Stocks

Thomson Reuters Is a Sneaky AI Play, and Its Stock Popped Earlier This Month

Thomson Reuters is an AI play, building AI into tools legal and tax professionals already use. See why TRI stock…

Read more »

earn passive income by investing in dividend paying stocks
Retirement

The Lazy Canadian’s Path to a Bigger Retirement: 1 Stock to Start With

This Canadian stock’s growing earnings, expanding retirement platform, and steady shareholder returns make it a compelling long-term holding for retirement…

Read more »

A lake in the shape of a solar, wind and energy storage system in the middle of a lush forest as a metaphor for the concept of clean and organic renewable energy.
Dividend Stocks

This Stock Belongs in Every Canadian’s TFSA, and Here’s Why

With a yield of 5.5% and 15 straight years of dividend increases, this TSX stock is a no-brainer buy in…

Read more »

woman looks ahead of her over water
Dividend Stocks

1 Move That Could Ease Your Retirement Worries

Holding the Vanguard FTSE Canadian High Yield ETF (TSX:VDY) in a TFSA can help you pay for your retirement.

Read more »

jar with coins and plant
Dividend Stocks

The Small Dividend Today That Could Grow Significanlty in 20 Years

A small 1.6% yield may not look exciting today, but this Canadian stock’s growing earnings, rising dividend, and long-term investments…

Read more »

Cannabis business and marijuana industry concept as the shadow of a dollar sign on a group of leaves
Cannabis Stocks

Curaleaf’s Takeover Bid for Aurora Cannabis: What Investors Need to Know

Curaleaf's takeover bid for Aurora Cannabis offers a premium but brings stock, debt, and deal risks. Here’s what ACB investors…

Read more »