For investors looking for the premier growth stock to build a portfolio with $5,000 right now, the options are daunting. Indeed, the Canadian stock market is chock full of companies with above-average growth rates, many of which trade at reasonable valuations.
One such company I’d certainly put in this category is Total Energy Services (TSX: TOT). Total Energy is an energy services company, providing a range of services to the oil and gas sector. The company operates under four divisions: rentals and transportation services, contract drilling services, well services, and compression and process services.
Thus, for those looking at ways to play growth in the Canadian energy sector, Total Energy provides a higher-beta option in this space. Let’s dive into why that could be a good thing, particularly for energy bulls who see commodity prices creeping higher from here.
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Keep an eye on dividends
Total Energy really can fit into multiple categories. The company’s recent cash flow and earnings growth have been substantial, leading to a very low price-earnings multiple of only 6.2 times. That said, it’s the company’s dividend that really caught my eye when looking at this stock. At the last earnings report, Total Energy’s board approved a dividend of $0.08 per quarter, bringing the company’s total yield to 3.6% at the time of writing.
Thus, for investors seeking not only capital appreciation but dividend income, this is a stock that can provide excellent total returns. I like the dividend component, particularly considering the dry spells the oil and gas sector can have (capital redistribution is always a good thing in my books).
Earnings growth matters, too
Analysts are now paying attention to Total Energy. Those following the company have noted a marked improvement in the company’s earnings per share over the past three years. In fact, over the last year alone, Total Energy saw its earnings per share swell to $1.54, from $0.63 the year prior. That’s a surge of nearly 150%, and one that should excite growth investors.
Notably, the company’s EBIT margins are also improving, driving these results. The company became 8.9% more profitable year over year, with many investors expecting further room for profit growth over time.
The earnings per share of TOT is ascending at an appreciable rate. Furthermore, insider shareholders also own a significant stake in this company. They are also buying more shares, which paints a rosy picture that Total Energy Services’s business is flourishing.
TOT stock remains a top performer, for good reason
Current shareholders enjoy both capital appreciation upside and dividend growth, with TOT stock remaining among the most lucrative options in the energy sector right now, in my view. Impressively, Total Energy has reserved a spot among the top 25 best-performing stocks in the Canadian market.
Now, Total Energy is still a ways off its previous all-time highs. The pandemic-driven lows, which saw TOT stock trade below $1 per share, still haunt many investors. However, now trading above the $8 level, Total Energy has shown its resilience and ability to weather past storms. Thus, those concerned about commodity price volatility may find some solace in this fact.
Bottom line
According to previous years’ data, Total Energy Services has proven its value time and again to its investors. The company’s revenue growth and EBIT margins have been rapidly growing along with earnings for shareholders, attracting more investors.
Total Energy’s consistently positive financial performance also ignites a bullish narrative among growth investors. Really, any investor type (growth, value, income) can benefit from owning this stock right now. That’s one of the key reasons why I think this company should be higher up on investor watch lists at the moment.
