As an asset class, the stock market has managed to deliver inflation-beating returns for shareholders over time. As equities are extremely volatile in the near term, it’s crucial to buy and hold stocks for several years to benefit from the power of compounding.
Here are two of the best Canadian stocks investors can buy with $1,000 right now.
Kraken Robotics stock
Valued at $336 million by market cap, Kraken Robotics (TSXV:PNG) has been on an absolute tear in the past decade, returning close to 6,400% to shareholders. A marine technology company, Kraken designs, manufactures, and sells software-centric sensors, batteries, and underwater robotic systems for unmanned underwater vehicles used in military and commercial applications.
Its SeaVision product is an underwater laser imaging system, and the company also provides a towed underwater vehicle for high-speed and high-resolution seabed mapping. Additionally, Kraken designs and manufactures pressure-tolerant thrusters, batteries, battery management systems, and digital signal processing, among other products.
Kraken Robotics has increased its revenue from $15.1 million in 2019 to $69.6 million in 2023, indicating a compound annual growth rate of 46.5%. In the last 12 months, its revenue has more than doubled year over year to $92 million.
Unlike several other growth companies, Kraken is profitable. For instance, its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) increased by 79% to $5.4 million in the second quarter (Q2), compared to $3 million in the year-ago period.
Kraken stock might seem expensive, priced at 35 times trailing 12-month earnings. However, a profitable company growing rapidly commands a premium valuation.
Kraken explained that industry demand signals are solid, with an increasing focus on surveillance and security of critical underwater infrastructure and subsea warfare driven by rising geopolitical tensions. It expects the growth of unmanned systems in the subsea demand to accelerate as subsea drones complement already existing surface warfare assets and submarines.
TerraVest industries stock
Valued at $1.8 billion by market cap, TerraVest Industries (TSX:TVK) manufactures and sells goods and services to companies in sectors such as energy, agriculture, mining, and transportation. The TSX stock has returned close to 2,000% to shareholders in the last ten years after adjusting for dividend reinvestments.
TerraVest Industries has increased revenue from $306.3 million in 2019 to $678.4 million in 2023. In the last 12 months, its sales have risen by 28% year over year to $855.1 million. As part of the equipment infrastructure segment, TerraVest’s operating income in the last 12 months has totalled $119 million, indicating a margin of almost 14%, up from 12% in 2019.
In the last three quarters, the company’s operating cash flow has more than doubled to $127 million, while its capital expenditures have risen from $8.88 million to $19 million. TerraVest has reported a distributable cash flow of $32 million in fiscal Q3 of 2024 (ended in June), up from $13.2 million in the year-ago period.
Comparatively, its dividend payouts totalled $2.72 million in Q3, indicating a payout ratio of just 9%. It pays shareholders an annual dividend of $0.60 per share, which translates to a forward yield of 0.64%. While the yield might seem low, TerraVest has enough room to easily increase these payouts.
Despite its market-thumping gains, TerraVest stock trades at 22.5 times forward earnings, which is reasonable, given its strong growth numbers.
