Market sentiment hasn’t been upbeat lately due to recession fears and more rate hikes expected soon. While the TSX is pulling back in March 2023, its 11 primary sectors remain in positive territory. But if you have the investment appetite right now, buy these three no-brainer stocks without hesitation.
Bird Construction (TSX: BDT), Black Diamond Group Limited (TSX: BDI), and Wajax Corporation (TSX: WJX) are defying the headwinds and outperforming the broader market. The return potential from these small-cap stocks could be higher if you include the dividend yields.
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Strong year
Bird Construction capped fiscal 2022 with strong revenue growth, profitability, and cash generation in the fourth quarter. The $492.4 million firm is Canada’s leading construction firm, providing construction services in all major markets. In Q4 2022, net income jumped 50.5% to $14.9 million versus Q4 2021.
For the fiscal year, net income was $49.8 million or a 16.5% year-over-year increase. The $657.2 million and $2. 4 billion construction revenues in Q4 and full-year, respectively, were new records for Bird. Management said the results reflect the strategic repositioning it has been doing over the past years.
Today, besides the diversified and risk-balanced business model, the construction firm has greater depth of cross-selling opportunities. Furthermore, the majority of revenues come from lower-risk contract types. At $9.17 per share (+13.8% year to date), the dividend offer is 4.29%. The Board recently approved a 10% dividend hike.
Specialty rental platform
Black Diamond is sizzling hot with its 40.2% year-to-date gain providing office solutions. At $6.77 per share, you can partake of the modest 1.17% dividend. Based on market analysts’ forecasts, the stock price could still climb 33.5% to $9.04 (on average) in 12 months. The $401.8 million Calgary-based company provides Modular Space Solutions (MSS) and Workforce Solutions (WFS).
While total revenue in 2022 declined 4% to $324.5 million versus 2021, profit and free cash flow increased 29% and 17% year over year to $26.4 million and $63.8 million, respectively. Management said Black Diamond benefits from its large and diverse specialty rental platform.
The rental revenues across many industries and geographies are steadily growing and predictable. Black Diamond is optimistic about future growth opportunities because of the rental program’s stability.
Solid fundamentals
Wajax has been around since 1858 and creates shareholder value by operating an integrated distribution system. The $536.5 million company provides the most diversified industrial products and services in Canada. At $25.07 per share, current investors enjoy a 27.1% year-to-date gain on top of the 4.2% dividend.
Last year, revenue and net earnings rose 19.9% and 36% to $1.9 billion and $72.4 million, respectively, versus 2021. Wajax President and CEO Iggy Domagalski said, “In 2022, we delivered record revenue of nearly $2 billion and strong adjusted earnings per share growth of nearly 35% on a fully diluted basis.”
For 2023, management expects solid fundamentals in many markets, particularly construction, energy, and mining. Domagalski adds, “Our strong balance sheet gives us the flexibility to invest in our expanded Hitachi relationship, additional organic initiatives, and acquisition opportunities to help drive future growth.”
Momentum stocks
Industrial stocks Bird Construction, Black Diamond, and Wajax have strong momentum in 2023. One or all are excellent options for growth investors.
