Three Canadian stocks trading below $10 are excellent picks before the next bull run. Bird Construction (TSX:BDT) and Black Diamond Group (TSX:BDI) keep rising, while StorageVault Canada (TSX:SVI) is well positioned for a breakout.
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Prominent builder
Bird Construction is one of Canada’s top builders and a reliable partner in civil infrastructure development. The $530.2 million construction company reported its highest quarterly revenue in the second quarter (Q2) of 2023, notwithstanding industry-wide challenges such as reduced construction activity and rising costs.
In the three months that ended June 30, 2023, construction revenue rose 19% to $686.4 million versus Q2 2022. While net income declined 2.8% year over year to $13.7 million, Bird’s combined Backlog ($3 billion) and Pending Backlog ($3.1 billion) continues to rise to new record levels.
The diversified and risk-balanced business model is the primary growth driver, aided by expanding cross-selling opportunities across its service offerings. Other strengths include little exposure to lump-sum turnkey projects and limited interest rate-sensitive residential and commercial construction projects.
Moreover, lower-risk contracts deliver the majority of revenues. Bird’s acquisition of Trinity Communication Services in February 2023 is a welcome boost. The diversified telecommunication and utility infrastructure contractor enables the well-respected builder to service national and regional telecommunication, utilities, power, and internet service providers.
In July 2023, Bird secured several institutional projects worth $350 million and was awarded contracts in the energy & mining sectors worth $180 million. If you invest today, the share price is $9.86 (+24.84% year to date), while the dividend offer is a hefty 4.48%.
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Enormous growth potential
Black Diamond operates in an industry with enormous growth potential. The core operating business units of this $364.95 million company provide workforce accommodations, modular buildings, full turnkey lodging, and major project solutions.
Modular Space Solutions (MSS) rents and sells temporary and permanent modular buildings. Workforce Solutions (WFS) rents small to large format accommodations, while LodgeLink offers remote workforce travel and logistics support and end-to-end crew travel management.
In the first half of 2023, revenue and profit climbed 23.6% and 12.4% year over year to $172.6 million and $8.98 million. Black Diamond’s rental platform is growing, and management anticipates robust growth throughout the year, extending into 2024.
At $6.02 per share, the year-to-date gain and trailing one-year return are 25.47% and 44.8%, respectively. You can partake in the modest but safe 1.34% dividend yield.
Niche market
StorageVault can achieve economies of scale once economic conditions normalize. The $1.83 company is Canada’s largest storage provider, operating over 238 storage locations nationwide. Allied businesses and services include last-mile storage & logistics and professional records management.
In the first half of 2023, storage revenue & management fees and net operating income (NOI) increased 12.4% year over year to $138.7 million and $90.9 million. The net income topped $9.7 million compared to the $15.85 million net loss from a year ago.
StorageVault is ready to meet the ever-increasing demand for storage space in Canada. It plans to pursue acquisitions, expand, and improve existing stores. The share price of $4.85 (-19.36% year to date) is a good entry point. Based on market analysts’ 12-month average price target, the return potential is 55.5% ($7.54).
Bright outlooks
The stocks in focus have bright business outlooks in 2023 and beyond. However, Bird Construction should deliver far superior returns from price appreciation and hefty dividends.
