Market corrections can be intimidating, but for value investors, they offer a chance to find solid companies trading at a discount. When stock prices fall across the board, some businesses get caught in the mix despite strong fundamentals. This creates an opportunity to pick up quality stocks at a bargain.
For Canadian investors looking for value plays, focusing on well-established companies with strong financials and growth potential is key. Badger Infrastructure Solutions (TSX:BDGI), Orogen Royalties (TSXV:OGN), and EMX Royalty (TSXV:EMX) all stand out as potential opportunities. Each operates in a unique sector, but all three bring something valuable to the table.
Badger Infrastructure
Badger Infrastructure Solutions specializes in non-destructive excavation services. It uses hydrovac technology, which involves pressurized water and vacuum systems to safely expose underground utilities. This method is widely used in construction, oil and gas, telecommunications, and municipal infrastructure. Unlike traditional excavation, hydrovac digging reduces damage risks, making it a preferred option for companies looking to avoid costly repairs.
As of its most recent earnings report, Badger generated revenue of $163.6 million in the fourth quarter (Q4) of 2024, representing a year-over-year increase. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $28.2 million, reflecting steady profitability. The Canadian stock also maintained a strong balance sheet, with liquidity supporting future expansion efforts.
Despite economic uncertainties, Badger’s services remain in demand. Municipalities continue investing in infrastructure upgrades, and companies require safe excavation methods to prevent costly accidents. With its market leadership and reliable cash flow, Badger stands out as a value stock worth considering.
Orogen Royalties
Orogen Royalties takes a different approach to value creation. Unlike traditional mining companies, which take on the risks and costs of exploration and development, Orogen focuses on acquiring and managing mining royalties. This allows it to benefit from production revenue without the operational risks associated with running a mine.
The Canadian stock’s flagship royalty interest is in the Ermitaño gold and silver mine, operated by First Majestic Silver in Mexico. This mine has been a strong performer, contributing a steady stream of cash flow to Orogen. Another major royalty is on the Silicon gold project in Nevada, a developing asset owned by AngloGold Ashanti.
In its latest financial report, Orogen highlighted $23.5 million in cash reserves and no debt, putting it in a strong financial position. Its royalty portfolio continues to grow, with new acquisitions adding long-term value.
The beauty of Orogen’s business model is that it benefits from exploration success without spending large amounts of capital. As more discoveries are made on properties where Orogen holds royalties, its potential earnings increase. This makes it an attractive stock for investors looking for exposure to the mining sector without the usual risks.
EMX Royalty
EMX Royalty operates on a similar model to Orogen but on a much larger scale. It has royalty interests in projects worldwide, covering gold, copper, and other base metals. Its diverse portfolio spreads risk across multiple jurisdictions, ensuring it isn’t reliant on any single operation.
In its latest earnings report, EMX generated US$27.4 million in revenue and other income for the full year 2024. This marked a record high for the Canadian stock, driven by royalty contributions from key assets, including the Gediktepe and Caserones mines. Adjusted royalty revenue came in strong, showing the benefits of EMX’s diversified approach.
One of EMX’s strengths is its ability to acquire royalties on promising early-stage projects. Over time, as these projects advance to production, royalty payments increase, providing long-term upside. Recent acquisitions have strengthened its cash flow potential, making it a compelling value play in the resource sector.
Bottom line
For investors navigating the correction, these Canadian stocks offer attractive entry points. While no investment is without risk, focusing on companies with strong business models and financial discipline increases the chances of long-term success. Value investing is about patience. Buying strong assets when they are underpriced and waiting for the market to recognize their true worth. Badger, Orogen, and EMX all have the potential to reward investors who take a long-term view.
