MTY Food Group fits in beautifully as an under the radar Canadian growth marvel. MTY is one of the best performing stocks on the TSX over the past 15 years rising over 100 folds, but most have never heard of them. Having said that, we’re probably familiar with their products; they own the mall food court.
Stanley Ma, the CEO has built a powerhouse out of almost thin air. He has been buying up mall food court assets at a prodigious clip while most have abandoned the space. He employs a disciplined acquisition process similar to CSU, SJ, ATD etc. and has been chipping away at assets for over a decade. MTY’s market cap was $10m in 2003; it stands at over $1B today. A proverbial 100 bagger.
The official description of the company is as follows: MTY franchises and operates quick-service restaurants under 58 banners in 5,500 locations across Canada, the US and internationally. The restaurant locations can be found in food courts, street fronts and other non-traditional formats (gas stations, convenience stores, cinemas, amusement parks etc..). The company also operates a distribution center and processing plant.
A few of their brands include:
We found MA like we find all our other companies; using stock screens. We look for companies that can demonstrate a strong history of high return on equity (ROE) generation. As we see below, MA not only meets our threshold levels of greater than 20% but the consistency is outstanding.
The chart below shows performance of MTY shares over the past 7 years. As with other growth stocks we own, we can see the general trend in stock price has been up but there have been periods of lengthy consolidation (2014-2016). This is normal because, usually the stock gets ahead of itself then trades down/sideways while the earnings catch up setting up the next leg up in share price and so on and so forth.
MTY is a growth by acquisition story. Stanley Ma has done an excellent job in creating shareholder wealth and we have no reason to believe this can’t continue. We are happy to hold this under the radar gem.
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Mike Preto and Jason Del Vicario are Investment Advisors at HollisWealth, a division of Industrial Alliance Securities Inc. Based in Vancouver, BC, Canada, they work together in bringing a unique approach to managing money to ensure their clients are financially prepared for their retirement. They can be reached at 604-895-3349.
This information has been prepared by Mike Preto and Jason del Vicario who are Investment Advisors for HollisWealth®. The opinions expressed in this article are those of the Investment Advisors only and do not necessarily reflect those of HollisWealth. HollisWealth® is a division of Industrial Alliance Securities Inc., a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.