What are we looking for?
Industrial stocks in Canada that stand out for efficiency and profitability.
In an environment shaped by trade frictions and renewed focus on domestic production, the industrial sector stands out as one of the more compelling ways to invest in Canada’s long-term competitiveness.
The screen
We started by focusing on Canadian industrial companies with a minimum market capitalization of $125-million to ensure sufficient liquidity and scale. To capture operational efficiency, we required firms to generate at least $200,000 in revenue per employee, highlighting businesses that are more productive and better able to leverage their work force.
To keep valuations reasonable, we excluded stocks trading above a 20 times price-to-earnings ratio. We also required a share price above $10, eliminating micro-cap and penny stocks.
Finally, to ensure balance sheet strength, we screened for companies with a debt-to-equity ratio below 1.5, to avoid overly leveraged names, and a current ratio greater than 1.0 to confirm adequate near-term liquidity.
More about Trading Central
Trading Central is a global leader in financial market research and investment analytics for retail online brokers and institutions. Its product suite provides actionable trading ideas based on technical and fundamental research covering stocks, exchange-traded funds, indexes, forex, options and commodities. Strategy Builder, our stock screener, is available through leading retail brokers in Canada and worldwide.
What we found
The world’s largest Caterpillar dealer, Finning International Inc., tops our screen. The company is a key player in selling, renting and servicing heavy equipment across Canada, South America and the U.K.
Finning stands out for its strong operational efficiency, generating $733,000 in revenue per employee, while maintaining reasonable leverage with a debt-to-equity ratio of 0.95 and a solid current ratio of 1.69. Investors have been rewarded with a 55.2-per-cent gain year-to-date and a 48.3-per-cent one-year return, supported by a sustainable 2.06-per-cent dividend yield.
Bird Construction Inc., the largest construction-focused name in the list, builds institutional, commercial and industrial projects nationwide.
The company posts impressive work-force productivity with $645,000 in revenue per employee. Bird maintains a healthy balance sheet, with a debt-to-equity ratio of 0.91 and a current ratio of 1.28, while paying a 3-per-cent dividend yield.
AtkinsRéalis Group Inc., formerly known as SNC-Lavalin, is the largest company on our list, with a market capitalization of $17-billion. The engineering and construction giant operates globally across infrastructure, energy and project management and has become a key player in supporting government and private-sector initiatives.
AtkinsRéalis posts $251,000 in revenue per employee, reflecting strong work-force productivity in a labour-intensive business, while maintaining low leverage with a debt-to-equity ratio of just 0.25 and a current ratio of 1.06. The stock has been a standout performer, gaining 37.2 per cent year-to-date and more than 100 per cent over the past year, underscoring the strength of its turnaround story.
Trading Central Strategy Builder provides a backtesting capability to evaluate how well an investing strategy would have worked in the past. Using a five-year historical period with quarterly rebalancing, the screen described had a 22-per-cent annualized return, compared with 12 per cent for the S&P/TSX 60 index.
Canada’s industrial sector may not always capture the same attention as resources or technology, but it continues to deliver both resilience and opportunity for investors. By focusing on companies that operate efficiently and are well positioned to benefit from shifting supply chains, government infrastructure spending and renewed domestic production, investors can gain exposure to firms that balance cyclical growth with steady income potential.
The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central with respect to investment in financial instruments. Investors should conduct further research before investing.
Gary Christie is head of North American research at Trading Central in Ottawa.
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