Canadian Large Caps Led by Women

A tribute to strong local female leaders that have made their way to the top

Vikram Barhat 10 March, 2021 | 4:28AM
Facebook Twitter LinkedIn

Women business leaders in boardroom

Despite platitudes and pledges to close the power gap, women remain severely underrepresented in the boardrooms of Canadian businesses. Even though studies have shown women are equally skilled as men, there remains a sizeable disconnect between vocal support for women empowerment and their appointments to the highest levels in the corporate world. As a result, women are a wafer-thin minority in corporate Canada.

A recent Globe and Mail study shows only 4% of companies in the S&P/TSX Composite Index are headed by female CEOs. In absolute terms, there are only nine women at the helm, out of 223 companies in the benchmark index. By contrast, south of the border, 8% of all Fortune 500 companies are led by women whereas women hold 7.8% of CEO positions in S&P 500 companies. Few would argue, when it comes to women in corner offices, the corporate world leaves a lot to be desired.

What better way than to celebrate International Women’s Day than to highlight some of Canada’s largest publicly traded companies that have women in the top executive ranks. A fitting tribute to women who most likely fought gender stereotypes and other odds on their way to the top in industries and boardrooms that remain exclusive preserve of white men. The stocks of these companies tick both quality and equality boxes making them attractive to those invested in female empowerment.

 

Ritchie Bros Auctioneers Inc
  Ticker RBA
  Current yield: 1.72%
  Forward P/E: 26.25
  Price US$64.82
  Fair value: US$62
  Value Fairly valued
  Moat Narrow
  Moat Trend Stable
  Star rating ***
Data as of March 05, 2021

Leading auctioneer of heavy equipment, Ritchie Bros. (RBA) operates industrial equipment marketplace but has more recently expanded to the sale of construction, agricultural, oilfield, and transportation equipment. The company currently operates 40 live auction sites in 13 countries, along with online marketplaces.

The company boasts two women in leading positions in management including director and chief executive officer Ann Fandozzi and chief financial officer Sharon Driscoll.

Known primarily for its unreserved live auctions, Ritchie Bros has bulked up its online presence in recent times. The auctioneer “has carved out an important niche by providing sellers of heavy equipment liquidity and certainty of transactions,” says a Morningstar equity report, noting that its live auctions don’t have minimum bids or reserve pricing, which nearly guarantees the sale of 99% of equipment at its events.

Ritchie Bros registered 4% revenue growth in 2020, year over year, led by 8% rise in service contracts, which accounted for about 63% of total sales for the year. Despite the headwind caused by pandemic restrictions in its European markets, the company racked up US$5.4 billion in gross transaction value for 2020, a 5% annual jump, says Morningstar sector director Brian Bernard, who recently upped the stock’s fair value from $60 to $62, prompted by the firm’s ability to increase earnings over the next 15 years.

 

TransAlta Corp
  Ticker TA
  Current yield: 1.73%
  Forward P/E: -
  Price $10.44
  Fair value: $8.50
  Value 23% Premium
  Moat None
  Moat Trend Stable
  Star rating **
Data as of March 05, 2021

Independent power producer based in Alberta, TransAlta (TA) owns more than 70 power plants in Canada, the Western United States, and Australia. The firm’s net generating capacity is approximately 50% coal-fired and 20% natural gas-fired. The remaining 30% consists primarily of hydroelectric plants and wind energy farms. The mix is expected to shift to more renewable energy and gas-fired generation in compliance with carbon emissions legislation.

TransAlta is helmed by Dawn Farrell who formerly held the COO position and brings more than 30 years of electric industry experience to the leadership role. “She and her team are doing a decent job playing what has become a very difficult hand due to depressed power prices and carbon legislation,” says a Morningstar equity report.

The energy producer’s fortunes are closely tied to Alberta power prices, which are volatile due to the small size of the market and supply/demand fundamentals that can change rapidly. “Although near-term pricing has recently strengthened due to carbon pricing,” the long-term prospects of Alberta power prices remain dim, the report cautions.

On a more positive note, though, TransAlta’s has several development projects in the works, including three wind farm projects acquired in the U.S. “Acquisitions are a good strategy for Alberta-based TransAlta to expand in the U.S,” says Morningstar equity analyst Charles Fishman, who recently raised the stock’s fair value from $6 to $6.55, prompted by the company’s renewable energy pipeline. 

 

BCE Inc
  Ticker BCE
  Current yield: 6.27%
  Forward P/E: 17.61
  Price US$55.72
  Fair value: US$65
  Value 14% discount
  Moat Narrow
  Moat Trend Stable
  Star rating ****
Data as of March 05, 2021

Canadian telecom behemoth, BCE (BCE) provides wireless, internet, television, and fixed-line services. With nearly 10 million customers, the company holds about 30% of the market. BCE also owns and operates a media segment comprising television, radio, and digital media assets.

Claire Gillies, president of Bell Mobility, is the company’s highest-ranked female executive, underscoring a distinguishable career achievement having risen through the ranks in both the industry and company that remain a boys’ club in the higher echelons of management.

BCE has been investing heavily to upgrade its wireline network by extending fibre to the home, which positions the firm to take a share over its footprint. The operator currently boasts over 3.7 million high-speed internet customers and a footprint that reaches three-fourths of the nation’s population, making BCE “the biggest Canadian broadband provider,” says a Morningstar equity report, while adding that “BCE is second to none in Canadian wireless,” which would help the firm dominate the market.

The telecom giant also has a formidable media business, which boasts a strong competitive edge over its peers' thanks to the unit’s high-quality and diversified offerings. “Crave is BCE’s over-the-top video-on-demand service available throughout Canada with a wealth of content, including HBO, Showtime, and Starz,” says Morningstar equity analyst Matthew Dolgin, who pegs the stock’s fair value at $65.

 

Fortis Inc
  Ticker FTS
  Current yield: 4.02%
  Forward P/E: 17.92
  Price $50.07
  Fair value: $56
  Value 11% Discount
  Moat Narrow
  Moat Trend Stable
  Star rating ****
Data as of March 05, 2021

Canadian utility major, Fortis (FTS) owns and operates transmission and distribution assets in Canada and the U.S., and the Caribbean. Roughly two-thirds of earnings are generated from its U.S. operations.

The company’s management boasts two highly accomplished women in powerful positions. Jocelyn Perry, executive vice-president and chief financial officer, is the winner of Canada’s Most Powerful Women: Top 100 2019 Awards. Nora Duke, executive vice president, sustainability and chief human resources officer, is among Canada's Most Powerful Women: Top 100 Award Winners in 2020.

Fortis’ prized asset in the U.S. is ITC Holdings, which potions it well “to benefit from a long runway of U.S. transmission investment opportunities from ageing infrastructure to supporting renewable energy growth,” says a Morningstar equity report.

On the Canadian side, Fortis' main regulated operations are in British Columbia, Alberta, and Newfoundland. “These relatively low-risk operations result in stable earnings and help fund consistent dividend growth,” says Morningstar equity analyst Andrew Bischof, pointing out that returns are lower in Canada because of a lower cost of capital from a lower equity component relative to the U.S.

Management's renewed focus on many internal growth projects is positive for investors. “Fortis has strong growth opportunities,” assures Bischof, who puts the stock’s fair value at $56, and forecasts numerous capital growth opportunities “should support more than 6% rate base growth and dividend growth through 2025.”

 

Want More Actionable Content In Your Inbox?

Sign Up For Our Newsletter Here

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
BCE Inc64.25 CAD-0.76Rating
Fortis Inc56.45 CAD-1.12Rating
Ritchie Bros Auctioneers Inc78.52 CAD0.11Rating
TransAlta Corp13.08 CAD0.23

About Author

Vikram Barhat

Vikram Barhat  Vikram Barhat is a Toronto-based financial writer specializing in investing, stock markets, personal finance and other areas of the financial services industry. He also writes for CNBC, BBC, The Globe and Mail, and Toronto Star.

© Copyright 2021 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies