Top Canadian stock Premium Brands Holdings Corporation (TSE:PBH) has generated explosive growth with a decent dividend
SmallCapPower | May 27, 2016: We all need food, but being successful in the food industry can be a tough chew. Not so, it seems, for top Canadian stock Premium Brands Holdings Corporation (TSE:PBH), which has rewarded its investors with an 800% plus return over the past 10 years.
Who said ‘buy and hold’ is dead? SmallCapPower.com takes a look at some Canadian companies that have rewarded patient investors that have held its shares over the past decade. Examining what has made these companies successful will hopefully help one find the next big winning stock for their portfolio. All share price returns represent cumulative 10-year percentage gains as of November 22, 2015.
Premium Brands Holdings Corporation (TSE:PBH): 828.4% Stock Price Appreciation
Food. We all need it, but its abundance in North America can mean low margins for companies trying to sell it. Fortunately, consumers on this continent are becoming more and more particular about what they eat and are willing to pay extra for quality to ensure good health. They also lead busy lives and increasingly turning to ready-made meal solutions.
Premium Brands has become successful in this space by manufacturing specialty food products with strong proprietary brands that dominate in niche markets. It also owns food distribution businesses with operations throughout Canada, as well as in Nevada, Ohio and Washington State.
Since 2010, the Company’s revenue has grown at a Compound Annual Growth Rate (CAGR) of 22% (7% organic and 15% through acquisitions).
Sales hit a record $1.5 billion in 2015, up 21.5% from 2014, while its EBITDA surged 43.8% to $111.6 million over the same time.
Premium Brands’ adjusted EBITDA margin improved to 7.5% in 2015 from 6.3% in 2014, and is expected to be in the range of 8.0% to 8.5% in 2016. The Company’s free cash flow in its latest quarter (Q1, 2016), meanwhile, increased to $18.9 million from $13.4 million during the same period last year.
All of which has allowed it to raise its quarterly dividend by 10.1% during the first quarter of this year to $0.38 per share, paying out 43.5% of its free cash flow for the period with a target of 50%. Its stock has a current yield of about 3%.
And Premium Brands continues to make strategic acquisitions, most recently in April 2016, when it bought meat packing company C&C Packing Inc., which has annual sales of about $250 million, for a purchase price of $102 million in cash and $24 million in stock.
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