Global growth is slowing, especially in Canada. Last quarter, Canada’s economy grew by just 0.1%
Apparently, the three stocks listed below haven’t noticed. Each grew profits by more than 100% in 2018.
If you’re looking for rapid growth in a slowing world, pay close attention to these companies.
Canada Goose Holdings (TSX:GOOS)(NYSE:GOOS)
In 2017, Canada Goose generated $16 million in profits from $304 million in revenues. Last year, profits grew to $74 million off $458 million in sales.
Few companies are growing as quickly as Canada Goose.
The reason is simple: people love their products. Today, 52 out of every 1,000 Canadians own a Canada Goose jacket. Few retailers have been able to match this level of penetration.
Shares currently trade at a pricey 76 times earnings, but if profit growth is sustained, the stock could be a bargain. The biggest source of growth should come from international sales.
In Japan and South Korea, only 10 people out of every 1,000 own a Canada Goose jacket. In the U.S. and Europe, it’s even less. In China, the biggest opportunity of all, 99.9% of the population has never purchased from the company.
The markets listed above are much different than Canada, but if Canada Goose can replicate even a fraction of its domestic success, profits should grow at breakneck speeds for years to come.
Imperial Oil (TSX:IMO)(NYSE:IMO)
In 2018, Imperial generated $1.7 billion in net profit from $24.4 billion in sales. The year before, the company earned just $390 million from $21.8 billion in sales.
Curiously, oil and gas production only grew slightly from year to year. What caused the huge spike in profits?
In 2014, oil prices collapsed by more than 50%. Prices still haven’t approached their previous levels of US$100 per barrel. Dozens of oil companies have gone broke, with many more diluting shareholders or battling mounting debt loads. This is not so with Imperial.
In each of the past five years, Imperial has posted a profit. While management worked to reduce costs, the company’s biggest advantage remains its diversification.
For example, its chemicals business delivered roughly $100 million in annual cash flow from 2009 to 2013. From 2014 to 2017, annual cash flow increased to $250 million. Last year, its chemicals segment delivered an astounding $350 million cash flow.
Other business segments, including retail and refining, offer similar benefits, delivering profits regardless of prevailing energy prices.
While you shouldn’t expect Imperial to grow earnings by another 100% this year, it’s consistently proven that it can thrive under any conditions — a rare trait in the energy industry.
Emera (TSX:EMA)
Emera’s sales actually fell last year, from $5 billion to $4.8 billion. Earnings, meanwhile, grew from $234 million to $547 million.
There’s a catch, however.
In 2017, the company paid more than $400 million in taxes. Last year, this dropped to just $50 million. The underlying business remains strong, but this stock offers an important lesson: pay attention to what’s driving the numbers.
I still really like Emera stock, even if shares are getting a bit pricey. But if you’re looking for a hyper-growth stock, I’d stick with something like Canada Goose.
