Best Returns On the TSX in the 2010s

I love you 3,000(%): Top 10 TSX Composite stocks of the decade



By Michelle Zadikian

It’s been a wild ride for the components of the S&P/TSX Composite Index over the past 10 years.
Canadian business has experienced devastating commodity price crashes, droughts of initial public offerings, the rise in popularity of exchange-traded funds, the end of marijuana prohibition, and the collapse of historic retailers. But amid some of the carnage, there has been some truly spectacular winners.
In the waning days of the last decade, if you booted your online trading account and put down a decent bet on any of the following stocks – and held on for the next 10 years straight – you might be celebrating the new year on a new yacht moored to your own private island (okay, that would have been a really big bet).

(NOTE: All total returns include dividend and other distributions and are based on Bloomberg data, assuming the purchase of the securities on Dec. 31, 2009. Estimated investment gains do not include taxes)

DOLLARAMA

Symbol: DOL
10-year total return: 1,030%
If you had invested $10,000 it would be worth $113,000

Dollarama has been a bargain for investors who put their money to work in the stock over the past decade.
The discount retailer is in a unique business situation because it has to grow its bottom line while sticking to fixed price points. But growth hasn’t been an issue as Canadians’ love affair with dollar stores hasn’t wavered.
At the turn of the decade, Dollarama had 652 locations across the country and had just started experimenting with $2 price tags.
Over subsequent years, the company continued to grow – opening more locations and introducing higher price points for its items. In 2017, the company’s shares spiked after Dollarama announced it was raising its store growth plan by several hundred locations and would begin accepting credit cards as payment, affirming its position as Canada’s dominant dollar store.
But it all came to a halt in 2018 as slowing sales spooked investors. That was followed by a report issued by short-seller Spruce Point Capital Management, which sent the stock tumbling. Since then, the company has made concerted efforts to stay truer to its name and cap future price increases for items, to the delight of customers.
The company is also looking to a new future in Latin America after closing a new stake in Dollar City, which will add international exposure in addition to its current 1,236 Canadian locations.



Photo courtesy: Paul Chiasson/The Canadian Press

ENGHOUSE SYSTEMS

Symbol: ENGH
10-year total return: 1,180%
If you had invested $10,000 it would be worth $128,000

What do you get when you put multiple veteran tech executives in a room? Enghouse Systems.
Investors have had to pay up in the form of rich valuations for the company but some would argue it’s worth it for a company with such a strong track record.
Enghouse is an expert in consolidating software companies – snapping up multiple firms in any given year and expanding its global and sectoral footprint in the process.
Generally, its business has been organized in two main segments centering around customer service and internal business operations management.
Enghouse CEO and largest shareholder Stephen J. Sadler has more acquisition integration experience than the average chief executive in Canada, especially as he also sits on the board of tech takeover king OpenText.
Tech companies such as Enghouse have also benefited from the mass exodus from resource stocks throughout the middle of the decade amid the commodity price crash – some of that money which found a new home in the tech sector.
The company’s most recent takeover is France-based AI customer engagement software provider Eptica.

ALIMENTATION COUCHE-TARD

Symbol: ATD/B
10-year total return: 1,190%
If you had invested $10,000 it would be worth $129,000

Alimentation Couche-Tard Inc. could arguably be named Bay Street’s consolidator king.
Growth-by-acquisition business strategies come with their own unique set of risks, but founder and former CEO Alain Bouchard and his successor Brian Hannasch have proven time and time again to investors that their takeover integration skills are some of the best around.
There have really been too many deals to count over the past decade, but major milestones for the company would include its 2012 agreement to buy Statoil Fuel and Retail for US$2.8-billion, an early 2016 deal to purchase Esso retail locations and another takeover later that year for CST Brands.
Additionally, Couche-Tard added more exposure to the U.S. with the purchase of convenience store operator Holiday in 2017.
Through organic and inorganic growth, the company has grown its convenience store count from nearly 6,000 to more than 16,000 locations through the past 10 years. It now derives 70 per cent of its revenue from the U.S., with the rest split between Canada and Europe.
To further integrate its store network, the company embarked on a major rebranding of its Circle K banner over the last half of the decade.

INTERRENT REIT

Symbol: IIP-U
10-year total return: 1,440%
If you had invested $10,000 it would be worth $154,000

InterRent REIT began the decade as the underdog.
The underperforming Ottawa-based real estate investment trust was fresh off a bitter, and very public, legal battle with NorthWest Value Partners where InterRent fended off a hostile takeover using a friendly private placement with property management company CLV Group.
CEO Mike McGahan knew things had to change in a big way though and began a multi-year journey to whip the company into shape – nothing and no one was spared.
InterRent had outsourced property management to CLV, embarked on a flurry of building sales and purchases with the help of numerous equity financings and mortgage re-financings and focused on staff development.
The buildings themselves also went under the knife.
InterRent wanted to grow organically by increasing rents and decreasing costs so the company began rolling out hydro sub-metering in its buildings to offload electricity bills onto tenants and poured money into improving the properties to attract more quality tenants.
The portfolio revamp couldn’t have come at a better time as the housing boom enveloped the Greater Toronto Area in 2016.
High home prices meant rental demand skyrocketed and InterRent sold several non-core buildings during the height of the craze and plowed the capital into its three core markets of the Greater Toronto Area (including Hamilton), Ottawa and Montreal.
As of the end of 2018, the Trust’s portfolio consisted of 80 properties containing about 9,300 suites.
“Our industry is going through an extremely competitive environment, more than ever. We have to continually look at how we can improve our offering, and ourselves as a team, to remain innovative. To stand still is not an option,” McGahan told BNN Bloomberg in an email.
Perhaps this is why his favourite quote is one from football coach Bill Belichick: “to live in the past is to die in the present.”

CARGOJET

Symbol: CJT
10-year total return: 1,570%
If you had invested $10,000 it would be worth $167,000

When we talk about the rise in e-commerce, it’s usually while framing the decimation of brick-and-mortar retailers.
But freighters like CargoJet have been on the winning side of the online shopping era.
Many Canadians might not even realize parcels they’ve ordered online might’ve been delivered on a CargoJet plane.
CargoJet delivers shipments between 14 major Canadian cities and has grown its international services over the past decade to include destinations in the U.S., Mexico, South America and Germany.
Long-term, stable contracts have been the name of the game for the overnight air cargo company, and has rounded out its customer base to capture business from e-commerce giants such as Amazon and delivery companies Purolator, UPS Canada and Canada Post.
CEO Ajay Virmani told BNN Bloomberg in an email that securing a $1-billion contract with Canada Post in 2014 and signing a 10-year agreement with UPS Canada the following year have been pivotal moments in the company’s decade.
Some investors might even consider the stock to be a proxy for the online shopping boom, all while being insulated from recent global trade tensions since it operates primarily within Canada.
At the turn of the decade, CargoJet delivered an average of 750,000 pounds of items every business night, which has grown to 1.3 million pounds of shipments per night today.

AURORA CANNABIS

Symbol: ACB
10-year total return: 2,760%
If you had invested $10,000 it would be worth $286,000

Aurora Cannabis’ journey on the public markets is one that spans from minerals to marijuana.
In 2014, Aurora Marijuana, as it was known back then, conducted a reverse takeover with shaky shell company Prescient Mining Corporation. Just like that, Prescient went from mining minerals to growing marijuana. The new entity rebranded as Aurora Cannabis.
But it was only around 2017 that the pot stocks really started to capture investors’ attention in anticipation of recreational cannabis legalization.
Marijuana soon became one of the hottest buzzwords of the decade and pot stocks reflected that.
The sector was the place to be and during height of the craze, their valuations skyrocketed as high as investors’ pot sales expectations. Most investors ignored warnings from big name Bay Streeters who were staying away because of regulatory uncertainty and lofty valuations.
Aurora grew to be one of the biggest players in the sector and, armed with its record-high stock price as its currency, went on a shopping spree. It bought smaller players, scaling its medical marijuana business while establishing a footprint in the burgeoning recreational market.
While you can’t ignore how much these stocks have come off from their record highs in the past year, investors big and small who got in during the early years were able to make some serious money.
As the Canadian pot market works to iron out a number of issues, Aurora Cannabis has set its sights on global expansion.



Photo courtesy: Jason Franson/Bloomberg News

AIR CANADA

Symbol: AC
10-year total return: 3,680%
If you had invested $10,000 it would be worth $378,000

Investors who bought Air Canada's stock in 2010 and held onto it should be sending Chief Executive Officer Calin Rovinescu a thank-you card.
Canada's largest airline found itself in yet another perilous position around 2010.
In addition to grappling with lower air travel demand in the wake of the financial crisis, the company was struggling with a massive pension shortfall and questions began to arise once again about its long-term viability.
Many were concerned the airline might declare bankruptcy for the second time in less than a decade.

Cue Rovinescu.

The CEO, who acted as Air Canada's chief restructuring officer in 2003, has helped see the airline through pilot strikes, the resolution of labour disputes, complex technological changes, fleet and branding updates, changes in foreign ownership rules, volatile fuel prices and the rise of ultra-low-cost carriers, all while asserting Air Canada’s dominance in the Canadian and global airline industry.
Today, the company and its subsidiaries account for a little more than half of the Canadian airline market share – and that number is set to grow as the company remains on track to close its takeover of Transat A.T. in first half of 2020 pending regulatory approvals.
In a 2018 interview with BNN Bloomberg, Rovinescu said his executive team had been proud of the company’s financial results and stock market performance, but the biggest win has been the turnaround in the company’s culture.
“When you look back over the last decade, the amazing contribution – the amazing energy – that our team brings every day to actually transform our business has been the most satisfying aspect of it,” Rovinescu said.
Credit has been given where credit is due – Rovinescu was named Canada’s Outstanding CEO of the Year in 2016 and is being inducted into the Canadian Business Hall of Fame.



Photo courtesy: Mark Blinch/The Canadian Press

CONSTELLATION SOFTWARE

Symbol: CSU
10-year total return: 4,060%
If you had invested $10,000 it would be worth $416,000

You can’t deploy an aggressive roll-up strategy and post a more than 4,000 per cent return over the past decade without stepping on a few toes.
Constellation Software Inc. is one of those companies whose products are widely used by so many Canadians yet they probably don’t even know it. But for the company’s shareholders, it’s hard to miss how well this stock has done over the past decade.
Former venture capitalist and company founder and CEO Mark Leonard has built his $28-billion software empire on the backs of only the best tech start-ups around the world, where each company must consist of three components: outstanding management, consistent profitability and above average growth.
In its 2010 fiscal year alone, the company completed about 21 acquisitions. But throughout the decade, Constellation has closed the curtains in terms of transparency – deciding to cease reporting certain performance metrics and only disclose how much money in total they spent on takeovers in any given year, rather than the exact number of companies bought.
Leonard has also retreated from the media spotlight.
It doesn’t appear investors care as the stock continues to hit new record highs year after year.
There’s no sector either in the private or public realm that Constellation isn’t active – ranging from the more mundane such as transit operation and utilities to the quirky, including golf courses, winery management and RV dealers.
Constellation doesn’t have the sex appeal other tech giants like Shopify Inc. or Google have, but investors who have bought into the growth-by-acquisition strategy have been handsomely rewarded.



Photo courtesy: The Canadian Press

BOYD GROUP INCOME FUND

Symbol: BYD-U
10-year total return: 4,230%
If you had invested $10,000 it would be worth $433,000

If there’s one thing Boyd Group knows best – it’s bad driving is good for business.
There were no truly pivotal moments for this company over the past decade, just a steady-as-she-goes strategy to acquire auto collision repair centres big and small across North America and integrate them into its business.
At the beginning of 2010, Boyd had 90 collision repair centres. Today, that number has ballooned to 670 locations, making it one of the largest providers in North America.
Boyd relies heavily on its relationships with major insurers and in the eyes of an insurance company – the bigger the repair supply chain, the better.
The company’s ability to seamlessly consolidate the highly-fragmented industry and expand into auto glass repairs has earned it top marks on Bay Street.
Boyd Group CEO Brock Bulbuck said the company is “recession resilient” in a 2016 interview with BNN Bloomberg because insurance companies typically pay for repairs, so demand isn’t as negatively impacted by economic downturns.
Investors seem to have shrugged off concerns about “peak auto” and the threat of self-driving cars is still years into the future.
In the more immediate term, unpredictable and more frequent extreme weather events in Canada and the U.S. will likely bode well for business.
Soon, investors will know the company as “Boyd Group Services” after obtaining approval from shareholders and the courts to change its name and convert its structure from an income trust to a public corporation.

KIRKLAND LAKE GOLD

Symbol: KL
10-year total return: 6,730%
If you had invested $10,000 it would be worth $683,000

With a return of more than 6,000 per cent, no other stock has shone as bright as Kirkland Lake Gold Ltd.
Back in 2010, the junior miner had less than 100 salaried employees and was a purely Canadian hometown kid – only operating its somewhat derelict Macassa Mine in its namesake town of Kirkland Lake, Ont.
The “asset” — a high-cost project with only minor levels of production — was essentially left for dead by its previous owner after it was flooded and subsequently partly decommissioned. Around 2013, the company said the mine needed “significant” work and a big cash injection if it had any chance of reaching the production goals set out by management.
What happened next sparked the kind of moonshot that most junior miner investors can only dream about.
While workers were toiling away in Ontario to get Macassa up to snuff, the company expanded into Australia with the 2016 takeover of Aussie producer Newmarket Gold for $1 billion, adding the Fosterville Mine to its portfolio. The deal confused Bay Street because the company had no connection to Australia and no overlapping projects – but it would prove to be a pivotal move and cement its path to stardom.
In a recent phone interview with BNN Bloomberg, CEO Anthony Makuch jokingly chalked some of it up to luck, but also says it’s about seeing potential that others can’t, as Fosterville is now one of the world’s highest-grade and most profitable mines.
To date, the Macassa and Fosterville Mines are its two main projects and its workforce has swelled to 1,729, along with 449 contractors as of the end of last year.
The company expected to pour around 50,000 ounces of gold at the beginning of the decade but fast forward to 2019 and the company raised its production target to as much as one million ounces.
While the price of gold has yet to return to its 2011 highs of more than US$1,800 an ounce, geopolitics and trade tensions have helped bullion steadily climb over the past few years, breathing new life into the sector and recapturing investors’ attentions.
The gold industry has also seen a revival with a string of mergers and acquisitions taking hold recently, including Kirkland Lake, which is in the midst of a $4.9-billion deal to buy Detour Gold Corp.

Photo courtesy: Kirkland Lake Gold