The basic materials sector was steady in 2024 and eventually ended second to information technology as the top-performing sector. Most of its constituents had a good start to 2025.
However, one stock that flies under the radar but is a smart buy right now is 5N Plus (TSX:VNP). The +95.4% gain last year is nothing short of a five-star performance. At only $7.65 per share, the trailing one-year price return is +113.69. You can buy 458 shares or use half the $7,000 Tax-Free Savings Account (TFSA) annual limit for tax-free money growth.
Growth industries
5N Plus develops, manufactures and sells specialty semiconductors and performance materials globally. It supplies ultra‐high purity specialty semiconductor materials and has established a strong market position in North America, Europe, and Asia (China excluded).
This $681.2 million company is a niche player in key growth industries. Its critical components include specialty semiconductors, solar cells, chemicals, high-purity metals, and low-melting-point alloys. These are used in terrestrial renewable energy, space solar power, imaging and sensing, health and pharmaceuticals, and technical materials.
5N Plus is the largest supplier to the renewable energy sector and is at the front and centre of energy-transition activities through its specialty semiconductor products. The enabling materials are for the next-generation energy storage infrastructure, and in orbit-powering commercial and defence satellites and various space vehicles.
Another strength of 5N Plus is research and development. It established R&D operations near customers and end-markets. Management’s ongoing concern is the enhancement of processes and new product development. The strategy is to leverage its strong technological platform and skillset to gain a first-to-market advantage.
Thriving business
The financial results in the most recent quarter (Q3 2024) reflect a thriving business. In the three months ending September 30, 2024, revenue and net earnings climbed 25.2% and 319.6% to US$78.8 million and US$6.4 million compared to Q3 2023. Specialty semiconductors accounted for 67% of total revenues.
According to management, the capacity in the new semiconductor compound in Montreal will soon ramp up to 100% after expansion. The newly installed capacity will enable the 5N Plus to meet contracted demand for 2025 and 2026 in the terrestrial renewable energy sector. Moreover, the facility has room for future capacity expansion.
Next chapter
5N Plus is preparing for the next growth phase, where commercial excellence is the primary focus. Besides leveraging its global leadership position, the company will capitalize on future opportunities in high-growth sectors and other markets like sensing and medical imaging.
The growing demand in terrestrial renewable energy and space solar power and long-term partnerships with key customers assure high profitability and sustained, if not predictable, cash flows. Its president and chief executive officer, Gervais Jacques, said, “We are now in a strong position to efficiently capture additional organic growth and are actively on the lookout for external growth opportunities.”
Lastly, Jacques added that advanced materials will remain a critical enabler of customers’ products, not a critical cost component. VNP’s total return of +218.75 in three years makes it a top candidate in the 2025 TSX30 List.
