Growth stocks lifted the TSX last year, as evidenced by the technology sector’s 57% overall gain. However, industrial stocks AtkinsRéalis (TSX: ATRL), ADF Group (TSX: DRX), and Hammond Power Solutions (TSX: HPS.A) are screaming buys right now, not tech stocks. Given the thriving businesses, their revenues could more than double by 2025.
High-profile projects
AtkinsRéalis, formerly or the rebranded SNC-Lavalin Group, reported significant revenue growth in the fourth quarter (Q4) and full 2023. The $9.67 billion global professional services and project management company continues to win contract awards and high-profile projects.
In the 12 months ending December 31, 2023, total revenue increased 14.4% year over year to $14.4%, while net income from continuing operations soared reached 1,630.1% from a year ago. In Q4, net income reached $90 million compared to the $54.4 million net loss in Q4 2022.
Ian L. Edwards, president and chief executive officer (CEO) of AtkinsRéalis, said, “We ended the year on a high note with strong fourth quarter financial results, including significant positive operating cash flows.” He added the new operational structure, foundational changes, and record $13.7 backlog should drive sustainable, profitable growth and shareholder value creation.
At $55.12 per share, ATRL is up 29.21% year to date and pays a modest 0.15% dividend.
Metal fabrication specialist
Terrebonne-based ADF Group operates in the metal fabrication and non-residential construction industries. The $306.8 million company is known for fabricating and installing complex structural metals. It also specializes in assembling heavy steel built-ups.
ADF bids for and wins contracts and projects for airport facilities, commercial, industrial, recreational complexes, office towers and high rises, and transportation infrastructure. In the first three quarters of fiscal 2024 (nine months ending October 31, 2023), revenues and net income climbed 21.7% and 115.3% year over year to $242.6 million and $27.1 million.
Its board chairman and CEO, Jean Paschini, said that besides the strong performance in the last few quarters, ADF is actively negotiating several projects and simultaneously growing the order backlog. In fiscal 2023, net income grew 56.2% to $14.93 million compared to fiscal 2022.
At $9.40 per share, the small-cap stock’s year-to-date gain and overall return in 3.01 years are 35.84% and 480.56%, respectively. The dividend offer is 0.21%.
Strong demand
Hammond Power Solutions is more expensive than AtkinsRéalis and ADF, but the returns are enormous. At $114.95, current investors enjoy a 40.70% year-to-date gain on top of the 0.52% dividend. Moreover, the gain in three years is 1,167.4%. Had you invested $5,000 three years ago, your money would be worth $63.368.25 today.
The $1.37 billion company manufactures dry-type transformers, power quality products, and related magnetics that enable electrification and address utility needs. Hammond operates globally and serves various industries, including irrigation and renewable energy.
After three quarters in 2023, sales increased 26.3% year over year to $526.1 million, while net earnings jumped 63.5% to $43.5 million from a year ago. In Q3 2023, the top line increased 20.5% to a record $179 million versus Q3 2022. Its CEO, Adrian Thomas, said there’s a strong demand across Hammond’s products and services.
High-growth stocks
ADF, AtkinsRéalis, and Hammond Power Solutions are TSX’s high-growth stocks outside of the tech sector. Because of their strong revenue growth, all three are potential multi-baggers in the coming years.
