3 great Canadian stocks to own
Each is a leader in its field and making waves outside the nation's borders.
By Will Ashworth
Canada celebrates its 145th birthday on Sunday.
Coast to coast, Canadians are celebrating with good beer, great food and close friends and family. As one of InvestorPlace's Canadian contributors, I wanted to celebrate in my own way by discussing three Canadian stocks to own now and through 2017, when the country's sesquicentennial will elicit serious jubilation.
Each of the companies below is a leader in its field and is making waves outside Canada's borders. Revenue and profit growth is essential. At the end of the day, investors in the U.S. and elsewhere should consider owning each of these stocks because they've performed admirably under difficult economic conditions.
Happy Canada Day!
Bank of Nova Scotia
Canadian banks have gained a well-deserved reputation in recent years for being well-run and profitable. Bloomberg News recently reported that Canada has four banks in the top 10 ranking of the World's Strongest Banks. A big part of this success is a result of stricter government regulations and oversight than in the U.S.
That's not to say Canadian banks don't have flaws. It's just that theirs are less noticeable. While the biggest bank in Canada is Royal Bank (RY), my favorite is Bank of Nova Scotia (BNS), which focuses on emerging markets in Latin America and Asia.
Scotiabank, as we call it up here, is building a huge business in Mexico. With 710 branches throughout Mexico and $9.4 billion in loans, it's expanding into other Latin American countries, including Colombia, where it bought a 51% stake in Banco Colpatria for $500 million in January.
International banking, spurred by higher growth in Latin America and Asia, saw its first-quarter net income increase by 14%, to $448 million. Scotiabank's focus on emerging markets rather than the U.S. will continue to pay dividends for years to come.
Brookfield Asset Management
When you think of the great holding companies, usually Berkshire Hathaway (BRK.B), Loews (L) or others come to mind. Rarely do you see Toronto-based Brookfield Asset Management (BAM) listed among this group.
That's OK with CEO Bruce Flatt, who has taken Brookfield (formerly known as Brascan) a long way since he took the reins in early 2002. One of the first things Flatt did was focus the company on three sectors: real estate, power generation and infrastructure. A value investor, Brookfield buys great assets at good prices.
When Flatt came aboard, Brookfield had assets of $22 billion, revenue of $4.7 billion and operating income of $1.8 billion. Today, it has $91 billion in assets, revenue of $15.9 billion and operating income of $6.6 billion. Over the past 10 years -- since Flatt took control -- Brookfield has grown in value by 20% a year and 35% annually in the last three years. Shareholders who held the stock at the beginning of 2002 and still hold it today have gains of 676%, compared with 14.7% for the S&P 500.
Brookfield's next big move will be to spin off its income-producing property businesses into Brookfield Property Partners, which will have $72 billion in assets under administration. Like everything else Flatt has touched, this venture is sure to be a winner.
There are plenty of business success stories in Canada, but none are as surprising as that of Lululemon (LULU), the Vancouver, B.C.-based retailer of yoga wear.
Canadians traditionally aren't good retailers. There's only a handful of companies over the years that have been successful in the U.S. Alimentation Couche-Tard is one example, though much of its success came via acquisitions.
Meanwhile, Lululemon's growth has been spectacular -- and it doesn't look as though it will be slowing anytime soon. Revenue in the U.S. has grown from $6.5 million in 2005 to $536.2 million in 2011.
Founded in Vancouver in 1998 by Chip Wilson (Canada's 15th-wealthiest person), LULU's been popular with Canadians from the very start. But given the horror stories Canadian retailers can tell about their unsuccessful forays into the U.S., it was easy for analysts to be skeptical of LULU's growth plans.
Well, no longer. Lululemon must now be considered one of Canada's greatest exports, with more than a billion dollars in revenue. You should continue to expect big things from CEO Christine Day and the rest of her team.
As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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