High interest rates coupled with surging bond yields are a deadly combination for stocks. Many stocks have fallen and trade at depressed prices today because of both factors. However, not all stocks feel the shock of rising interest rates. Three under-the-radar stocks benefit from them or are least affected, given their market-beating returns.
Wajax Corporation (TSX: WJX), CES Energy Solutions (TSX: CEU), and 5N Plus (TSX: VNP) display stability despite heightened market volatility. Besides the outperformance, all three pay decent dividends. The stocks are ideal picks for growth, value, or dividend investors.
A revelation
Wajax is hardly at the centre of discussions, but its performance is a revelation in 2023. The $687 million company provides diversified industrial products and services. At $31.97 per share, the year-to-date gain is 68.5% and the trailing one-year price return is 76.5%. If you invest today, you can partake in the generous 4.35% dividend.
In the first half of 2023, consolidated revenue and net earnings increased 15.9% and 23% year over year to $1.1 billion and $46.5 million, respectively. Wajax’s financial performance in Q2 2023 was equally strong, with revenue and earnings growth of 14.7% and 33.5% versus Q2 2022, respectively.
“Top-line growth was supported by sustained customer demand across all regions, including continued positive momentum in central Canada,” said Iggy Domagalski, President and CEO of Wajax. He notes the significant equipment and product support sales and strong industrial parts and engineered repair services revenue.
Wajax is enduring the headwinds due to solid fundamentals and strong demand in less cyclical industrial parts. The company boasts a robust $551.2 million backlog, and its expanded relationship with Hitachi is a competitive advantage.
Top-performing energy stock
Energy stocks have recovered from the initial slump in 2023 and are back in positive territory. However, CES Energy Solutions is outperforming the sector year to date, +38.05% versus +13.07%. This $923.7 million company isn’t an oil producer but a manufacturer of advanced consumable fluids and specialty chemicals in North America.
For the first half of 2023, the top and bottom lines rose 36% and 120% to $744.4 million and $66.9 million from a year ago. In Q2 2023 alone, free cash flow grew 23% year over year to $66.7 million.
With cash flow generation at near record levels, CES Energy said it could increase share buybacks and preserve dividend levels. If you invest today ($3.72 per share), the energy stock pays a decent 2.69% dividend.
Specialty semiconductors
The investment takeaway for 5N Plus is simple: semiconductors. This $305.2 million Montreal-based company operates in the basic materials sector. The current share price of $3.45 (+18.56% year to date) is a good entry point before the stock soars.
5N Plus deploys proprietary and proven technologies whose applications are usable across industries, including pharmaceutical, medical imaging, renewable energy, security, and space, among others. The manufacturer of specialty semiconductors and performance materials has facilities in North America, Europe, and Asia.
Its wholly owned subsidiary, AZUR SPACE Solar Power GmbH (AZUR), is a potential growth driver. AZUR will help power the world’s largest next-generation long-duration energy storage project in Australia.
Rising from obscurity
Wajax, CES Energy Solutions, and 5N Plus are ideal for growth, value, or dividend investors. Expect the three stocks to rise from obscurity and deliver massive returns.
