It looks like the way we get around is changing a lot these days. We’re seeing more electric vehicles (EV), a bigger focus on being green, and new ways of thinking about transportation. Some Canadian companies are in a good spot to take advantage of these shifts. Two that stand out are NFI Group (TSX: NFI) and Automotive Properties Real Estate Investment Trust (TSX: APR.UN). They both offer different ways for investors to potentially benefit from the evolving transportation scene.
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NFI Group
Let’s start with NFI Group, which is based in Winnipeg. The TSX stock is a big manufacturer of buses and coaches, and is also getting into the zero-emission vehicle game. Looking at results for the last three months of 2024, NFI reported revenue of US$837 million. This was a 5.1% increase compared to the same period the year before.
The vehicle maker delivered 1,180 equivalent units, and a significant 26.1% of those were battery and fuel cell-electric buses. The net earnings for that quarter were US$18.6 million. This is a big improvement from a loss they had during the same time in the previous year. Furthermore, the adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) reached US$67.9 million, marking a substantial 76.4% increase year-over-year. What’s also interesting is that NFI’s backlog of orders hit a record US$12.8 billion, and zero-emission buses now make up 40.3% of that total. It seems like the demand for the TSX stock’s electric buses is really picking up.
The part of NFI that deals with after-sales service and parts also did well, bringing in US$157.1 million in revenue in the last three months of 2024. This was a 15.8% increase from the year before. The adjusted EBITDA for this segment was US$32.8 million, up 11.1% year-over-year. With a focus on zero-emission vehicles and a strong pile of orders, NFI looks well-positioned for future growth as cities and transit agencies look for more sustainable ways to move people around.
Automotive Properties REIT
Now, let’s look at Automotive Properties REIT. This TSX stock does something a bit different. It owns and acquires properties across Canada that are used as car dealerships. In the first three months of 2024, the real estate investment trust (REIT) reported rental revenue of $23.4 million, which was a 2.3% increase from the same period in 2023.
The net income for that quarter was $20.9 million, up from $17 million in the first quarter of 2023. Funds from operations per unit, a key measure for REITs, stayed steady at $0.241. Meanwhile, adjusted funds from operations per unit increased slightly to $0.234 from $0.229 in the same period of the previous year.
The REIT benefits from having long-term leases with the car dealerships that rent the properties. This provides the TSX stock with a pretty stable and predictable flow of income. As of the end of March 2024, the debt compared to total property value was at 44.6%, while $57.7 million was available under credit lines. Because it focuses on the automotive sector, the REIT could benefit from the ongoing trend of dealerships consolidating and the increasing need for capital by dealership operators. It’s like this TSX stock’s providing the real estate infrastructure for the car industry.
Bottom line
For investors who are interested in taking advantage of the changes happening in transportation, both NFI Group and Automotive Properties REIT could be interesting options. NFI’s leadership in the zero-emission transit market and strong financial performance suggest it has room to grow. On the other hand, Automotive Properties REIT offers a way to invest in the automotive retail sector through stable, income-generating real estate. As transportation continues to evolve, these TSX stocks seem well-equipped to navigate the changes and potentially offer good returns to investors.
