Choose a black diamond over gold for superior returns
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Basic Materials is the second best performing sector on the TSX after Energy so far in 2022. This sector comprised of gold, silver and copper producers is up 18.92% since the beginning of the year. Barrick Gold and Cornerstone Mining are among the booming mining stocks with gains of over 26% so far in 2022.
Meanwhile, a constituent in the industrials sector could offer returns far superior to gold or copper stocks. The company has a winning business model adapted to the current work environment. It also serves various industries, including oil and gas and mining.
Black Diamond Group Limited (TSX:BDI) in the rental and leasing services industry had a fantastic 2021. Given last year’s impressive operational and financial results, expect the stock to emerge from obscurity and be a top pick for growth investors. Market analysts predict a potential return of between 53.6% and 78.6% in one year. The current stock price is only $4.88.
The $259 million Calgary-based company started as a small business in 2003. Today, Black Diamond is a leading provider of space rental and hosting solutions for the hand -work. She has diversified her clientele not only in Canada, but also in the United States and Australia.
Specialty land rentals are available for industries such as oil and gas, mining, energy, construction and engineering. Black Diamond also caters to financial, military, government and educational institutions. Two operating business units are the main sources of revenue, while its digital marketplace platform grows.
Modular Space Solutions (MSS) offers high quality and cost effective modular space rentals. In addition to selling new and used space rentals, MSS provides delivery, installation, project management and other ancillary products and services. Workforce solutions (WFS) provides complete workforce solutions, including rental of accommodation assets, surface equipment and a full turnkey accommodation offering.
Customers who require travel management services, such as workforce travel and accommodation, can obtain them through LodgeLink, Black Diamond’s digital marketplace platform.
In the fourth quarter and full year of 2021, Black Diamond recorded revenue growth of 71% and 89% compared to the same periods in 2020. Funds from operations increased by 80% from year over year to reach $76.6 million. The company recorded a 683% turnaround, with profit reaching $20.4 million, compared to a net loss of $3.5 million the previous year.
In addition to achieving record sales revenue, MSS set an eighth consecutive quarterly rental revenue record. Management said activity levels were highest in the eastern United States. LodgeLink recorded its best quarter for gross bookings and volume of room nights booked.
For 2022, Black Diamond remains positive. It expects growth in recurring rental income streams and free cash flow. The outlook for WFS is constructive as it should benefit from strong commodity prices. There are exciting opportunities within the WFS business that the company can capitalize on to monetize idle assets.
Trevor Haynes, CEO of Black Diamond, said, “Over the past few years we have worked to evolve and diversify our platform. According to management, generating returns for shareholders is a priority. In the fourth quarter of 202If you invest today, the dividend yield is 1.35%.
Thrive in a demanding environment
Currently, investors are mainly focused on rising commodity prices and are looking for safety nets. While gold and mining stocks are top prospects, companies with winning business models are surging. Black Diamond is one of them.