Adding 3 to Canada Coverage

By Will Ashworth

Welcome to the new week here on InvestorThread. In my debut piece last week, I outlined what I’ll write about in the coming weeks.

Most importantly, I’ll cover Canadian stocks with market caps between $100 million and $10 billion. They will be stocks held by active fund managers and part of their top 25 holdings. The less known, the better.

I plan to develop a diversified portfolio of 30 names over the next four weeks. The names will be selected from actively managed Canadian equity funds.

Once I get to 30 and complete the selection process, I’ll dig into each of the 30 over subsequent issues. I anticipate the whole process will take about six months. Once done, I’ll develop a new angle to inform and educate readers.

My first three picks last week were from the RBC Canadian Mid-Cap Equity A (0P0001MVJA.TO) — Premium Brands Holdings (TSX:PBH), Killam Apartment REIT (TSX:KMP, KMMPF:OTCMKTS), and Athabasca Oil (TSE:ATH) .

Today’s three have been selected from the Mawer New Canada Fund. Launched in January 1988, it has $209 million in net assets and is currently closed to new investors. (Note: All figures in CAD, unless otherwise indicated.)

Its objective is to buy the stocks of smaller Canadian companies at a discount to intrinsic value and hold them for an extended period to maximize returns for its unitholders.

Happy Investing.

Wajax Corp. (WJX)

Wajax Corp. (TSX:WJX, OTCMKTS:WJXFF) is the 11th-largest holding in Mawer New Canada Fund, with a 3.1% weighting. The stock is part of the S&P/TSX SmallCap Index.

It represents the industrials sector and has a market cap of $548 million. Its shares have risen 61% in the past five years, 12 percentage points higher than the S&P/TSX Composite Index.

The company has been in business for 165 years, launching several years before Canada’s confederation, as a blacksmith shop in Montreal. Today, it is not only the largest Hitachi heavy equipment dealership in North America but also a provider of industrial parts and engineered repair services.

Not surprisingly, according to S&P Global Market Intelligence, its largest shareholder is Mawer Investment Management, which owns 16.5% of the company's stock.

With a significant portion of Canadian stocks in the energy and financial sectors, it's nice to have alternatives in other sectors that provide income and capital appreciation.

Wajax’s next earnings report is aftermarket on Nov. 5.

Winpak Ltd. (WPK)

Winpak Ltd. (TSX:WPK, OTCMKTS:WIPKF) is the 10th-largest holding with a 3.3% weighting. The stock is also part of the S&P/TSX SmallCap Index. It represents the consumer cyclicals sector and has a market cap of $2.91 billion. Its shares have gone sideways in the past five years, gaining just 3%.

Winpak is based in Winnipeg and is the fourth-largest public company by market cap in Manitoba. Its history dates back to 1977 when it was a single manufacturing facility. The company specializes in Flexible Packaging, Rigid Packaging & Lidding and Packaging Machinery.

It has grown through a combination of organic growth and acquisitions. Its customers include Campbell Soup (NYSE:CPB), Loblaw Companies (TSX:L), and Walmart (NYSE:WMT).

Often touted in Canadian financial press as a value play, its stock could shine in the next few years under the control of Finnish packaging conglomerate Wihuri International Oy, which owns 54% of it.

Topicus.com (TOI)

Topicus.com (TSXV:TOI, OTCMKTS:TOITF) is one of Constellation Software’s (TSX:CSU) spinoffs. With a 2.4% weighting, it is the 21st-largest holding of Mawer’s fund and part of the S&P/TSX Venture Composite Index.

It represents the technology sector and has a market cap of $10.3 billion. While it’s slightly over the high end of my market cap criteria, I couldn’t resist including it. Anything related to Constellation Software and its founder, Mark Leonard, is a must.

Topicus is Constellation’s European provider of vertical market software and platforms. It operates in 26 European countries across 40 vertical markets and serves more than 100,000 customers.

The company was spun out from Constellation and began trading on the TSX Venture Exchange in February 2021. Constellation shareholders received 1.86 shares of Topicus for each share held in the parent. TOI shares have doubled since becoming a public company less than four years ago.

Topicus.com’s next earnings report is aftermarket on Oct. 31.

Until next time.

Disclaimer: The author did not hold a position in any of the securities mentioned above. The information provided in this article is for educational and informational purposes only and should not be construed as investment advice. Always conduct your own research or consult with a licensed financial professional before making any investment decisions. Past performance is not indicative of future results.