The TSX today continues to trend near 52-week highs, with the market rally looking like it could stabilize in the near future. Part of this comes down to the performance of individual companies. As companies continue to perform better, investors will get more and more on board. And in the case of this Canadian growth stock, it looks like it could be the beginning of a strong rally.
What happened?
Shares of Héroux-Devtek (TSX: HRX) hit a new 52-week high this week as the aerospace company reported its earnings for the third quarter. Shares jumped almost 10% as the company saw sales increase 16.1% year over year. The $163.5 million in sales was a huge improvement over the $140.9 million reported the year before.
What’s more, operating income also climbed to $15.6 million, compared to just $5.1 million last year. Profit reached $9 million as well, up from a lowly $1.8 million in 2023. According to Chief Executive Officer Martin Brassard, this is just par for the course as HRX stock continues its strategic initiatives.
The boost came in part from the delivery of Boeing 777 and Embraer Praetor programs as well as defence sales. This was the case even with the delay in deliveries of the Boeing F-18 program. It all added up for the aerospace stock. Yet analysts believe that there is even more room to run.
Stabilize and adjust
HRX stock may have reported better-than-expected results in both profit and revenue, but there is more to come. That’s at least what management said thanks to its “strategic initiatives,” as stated earlier. These initiatives are meant to stabilize the company’s production system. From there, it should be able to continue on and adjust pricing.
Therefore, it seems as though this recent quarter merely proved that what the company did is now working. And that means there is ideally going to be even more year-over-year growth for the following quarters.
Analysts weighed in quickly on the performance, with one recommending the stock as a buy. Further, they called the earnings “strong,” expecting even more of a positive reaction in the near future — especially given that it wasn’t just in one area or another where the stock beat estimates. It was fully and totally across the board.
Bottom line
If you’re looking for stocks on the recovery, then HRX stock is one Canadian stock to consider. Shares may be up 9% as of writing after earnings. However, there is a potential upside of 19% to reach consensus price estimates. And that’s without factoring in any more analyst upgrades after earnings.
While the Canadian stock may not offer dividends, those earnings are going steadily back into these strategic initiatives. And whatever it is the company is doing, it’s working. Shares are now up 9% in the last year, yet still trade at just 0.89 times sales. Further, shares have climbed 13% since the market bottom back in late October and early November. With shares surging in that time, it looks like there is more room to run for the stock to even hit all-time highs.
