SIS:CC - We're Only Getting Older: A Top TSX Stock That Benefits From an Aging Population
2023-07-25 13:00:00 ET
The global population is greying, and data from the United Nations estimates there will be around 2 billion people over 60 worldwide by 2050. In Canada, Statistics Canada forecasts that those 65 or older will comprise 22.5% of the country’s population in 2030.
One of the pressing needs of people getting older, especially those with physical and cognitive limitations, is mobility. They can still participate in society and contribute to the economy if they can maintain mobility. Meanwhile, a Laval, Quebec-based company is ready to meet the challenge and benefit considerably from an aging population .
Accessibility leader and mobility champion
Savaria Corporation ( TSX:SIS ) is a leading manufacturer in the accessibility industry. The product portfolio of this $1.1 billion specialty industrial machinery company helps improve the mobility of older, physically challenged, and disabled individuals.
The extensive product lines include home and commercial elevators, stairlifts, ceiling lifts, wheelchair lifts, and adapted vehicles. Span Division, one of six major divisions, offers medical beds and therapeutic surfaces.
Savaria can easily reach global markets because of its extensive manufacturing network. It has six state-of-the-art plants in Canada, five in Europe, two in the U.S. and China (including pre-assembly operations), plus one in Mexico. The research and development team creates new products and innovations to improve existing products.
Fortunate position
Savaria’s Chairman, President and CEO, Marcel Bourassa, believe the company is in a fortunate position to serve the needs of a more predictable global aging population. For 2022, revenue rose 19.3% to $789 million versus 2021. Notably, net earnings soared 206% year over year to $35.3 million.
Also, cash flows related to operating activities in 2022 jumped 58% to $90.7 million from a year ago. The strong rebound followed weak earnings in 2021 due to the continued impact of the pandemic, and acquisitions and integration costs. Acquisitions, particularly the Handicare Group, contributed significantly to Savaria’s organic growth.
In Q1 2023, revenue and net earnings increased 15% and 13% to $211.6 million and $6 million versus Q1 2022, respectively. Management expects between 8% and 10% revenue growth this year. The contributing factors are high backlog levels, cross-selling initiatives, and strong demand in the Accessibility and Patient Care business segments.
Monthly dividends
Savaria is among the select few on the TSX paying monthly dividends. If you invest today, the dividend yield is 2.99%. At $17.18 per share, the year-to-date gain and trailing one-year price return are 24.8% and 34.4%, respectively. Market analysts’ 12-month average price target for the growth stock is $21.56, with a return potential of 25%.
Profitable growth story
Slowly but surely, Savaria is on track to achieving its goal of generating approximately $1 billion in revenue in fiscal 2025. Besides the expected revenue synergies with Handicare, the stay-at-home trend among older adults and higher investments by governments in healthcare infrastructure bode well for Savaria.
Even if Savaria warns that the accessibility industry is exposed to various risks and uncertainties, there’s no doubt that the aging population is its most significant tailwind. You can see a profitable growth story developing here. The accessibility equipment manufacturer should be the industry leader for years to come.
The post We’re Only Getting Older: A Top TSX Stock That Benefits From an Aging Population appeared first on The Motley Fool Canada .
Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .
2023