We got our first taste of market volatility in quite some time as the markets took a bit of a dive on Friday afternoon. The drop was primarily related to a weaker-than-expected jobs report in the United States, and unpredictable tariff deals didn’t make the situation any better.
As I am writing this Monday morning, those losses look to be partially offset by a strong open in the US markets, with the Canadian ones being closed.
With the markets sitting near all-time highs, they can likely be expected to see a bit of pullback on the weaker jobs report. On the flip side, it could finally be the incentive the Federal Reserve needs to cut interest rates, which has been known to be bullish for stocks overall.
This is a fairly peculiar situation for investors. Typically, stocks sell off in advance of a weakening economy. When the economy does finally hit somewhat of a bottom, stocks tend to start recovering. However, we now have cracks in the economy with stocks at all-time highs and interest rates yet to come down.
Ever since the pandemic, we’ve had few “normal” market environments. As I’ve always said, for the long-term investor, the short-term noise doesn’t matter. In fact, many investors, particularly those with longer time horizons, should welcome lower stock prices.
Whether the markets are up 20% to close out 2025 or down 20%, simply stick to the goal of buying strong companies and owning them for the long term.
Retail investors often achieve the highest levels of wealth by earning average returns over an above-average length of time. It’s tempting to chase huge gains during times like this, or it’s tempting to hoard cash in an effort to try to time an eventual correction.
As I always say, there are two end results that can come of those impulses. You either get lucky or you’re wrong.
Let’s dive into some earnings reports from Stocktrades Premium featured companies.
Of note, I didn’t make any portfolio moves this week, but will start with weekly routine purchases next week, and will start providing commentary on the moves again in the newsletters.
Intact Financial (TSE:IFC)
Intact posted yet another quarter of rock-solid results. Earnings per share came in at $4.70 compared to expectations for $3.79, and net operating income per share of $5.23 was also well ahead of estimates for $4.02.
The company took a bit of a dip on earnings day, and my only assumption is that the company has gone on such a solid run (up 25% over the last year) that some profit-taking was on the table for those who didn’t feel the quarter was good enough. But make no mistake, this company is still firing on all cylinders.
Premiums written increased by 4%, primarily through its personal insurance segment.
The company’s combined ratio, which compares premiums written to claims paid, came in at 86.1%. This means for every $1 collected in premiums, the company paid out $0.861 in claims.
You’ll notice this combined ratio is much lower than Intact has normally reported over the last few quarters (see chart below), and this is primarily because the company did not have to pay out many catastrophe losses.
This low of a ratio, especially with the heightened amount of catastrophe losses over the last few years, is likely unsustainable, but solid nonetheless.
Overall, book value grew by 12%, earnings by 16%, and net operating income per share (NOIPS) by 8%. NOIPS is the more direct indication of the strength of its insurance business, as it excludes all non-insurance earnings.
The company has finally got its debt-to-total capital ratio below where it was prior to its string of acquisitions last year.
This is a strong signal of the company’s prudence when it comes to debt management, and is one of the reasons I like the company so much.
The company issued guidance in which it expects personal insurance lines to grow in the high single-digits to potentially even low double digits, while its commercial and specialty lines will grow a little slower, in the mid-single digits.
It’s been a heck of a run for a lot of insurance companies over the last 5 years or so, as higher interest rates have allowed them to benefit substantially from invested floats, plus the inflationary impacts elevating premiums.
Although there is still a ton of runway for Intact and it will remain a core position in my portfolio, it is likely to grow in line with earnings at these valuations, and it is unlikely we will continue to see the 115%~ returns it has provided over the last 5 years.
TFI International (TSE:TFII)
TFI is still struggling operationally, but this was a pretty solid quarter all things considered. Holding these cyclical stocks during these economic drawdowns is tough. However, adding to them at economic lows is ultimately how we realize outsized returns from owning them.
They posted a near double-digit beat on earnings, and margins showed a bit of stability. In addition to this, the company’s prudence from a capital preservation perspective is starting to show, likely injecting some confidence into investors about their ability to navigate the current environment.
Overall revenue came in at $1.8B, which is 10% lower than last year. Earnings fell by around 22% over the same timeframe.
However, as mentioned, operating margins came in higher than last quarter, resulting in an increase in operating income. As a result, free cash flow increased by 20% year-over-year. A recovery in margins is a good sign, as they had been consistently declining for the better part of a year now.
It wasn’t only the increase in margins that resulted in boosted free cash flow, however. The company is also significantly scaling back capital expenditures because of the environment, prioritizing capital preservation as they try to figure out how long this freight recession is going to last.
When we look to less than truckload, the company’s bread and butter segment, revenue fell by 11% year-over-year and operating income fell by 32%. If you look to the chart below, you can see the company is not only seeing fewer shipments, but it’s also earning less from each shipment because of heightened competition combined with lower demand.
For truckload, revenue fell by 3.5% and operating income by high single-digits. Logistics, which has been the steadier segment over the last while, is starting to show weakness as well, with both revenue and earnings falling by double digits.
One of the more important elements for TFI right now is going to be management commentary, guidance, and overall strategy moving forward. Results are going to be soft, and everyone expects them to be soft. So, this stock is going to move primarily on the commentary from the team and their discipline.
TFI has always been an aggressive company in terms of acquisitions. However, the tone for this is changing in the current environment.
Not because they’re uneasy about deploying that capital, but because they believe that TFI itself provides the most value in the trucking industry right now. As a result, the company repurchased over 475,000 shares on the quarter and will continue to pursue aggressive buybacks throughout the year as its stock remains discounted. As you can tell by the chart below, buyback activity is ramping up.
They mentioned that acquisitions could continue in 2026 as the environment improves, but they have no plans outside of buying TFI stock back in 2025. Obviously, this could always change if the right offer comes around, but I wouldn’t expect anything crazy. The company mentions that it needs some sort of stability in the Less-Than-Truckload environment before it starts pulling the trigger on acquisitions.
The company issued its full-year guidance, in which it could generate free cash flows in excess of $700M. They mention if the environment does improve before the end of the year, they could hit $1B.
The company also mentioned it plans to reduce its debt over the course of the year in combination with share buybacks. Their leverage ratio, which compares their EBITDA to their debt, sits at 2.35x. They want this to hit 2x~ by the end of the year.
When the environment improves, they’re willing to ramp it up to 3x in order to complete acquisitions. But for right now, they’re just being cautious.
What I take from this quarter is simply an outstanding management team that is doing everything it can to make sure it can not only weather this storm, but make the best of it.
Aggressive buybacks at this point in time are likely to be extremely beneficial when the freight environment improves and economic activity picks up. From there, the company should be able to utilize free cash flow to continue to make small, tuck-in acquisitions and improve its dominance as the best trucking and logistics company in North America.
You can view my full report on TFI here
Toromont Industries (TSE:TIH)
Toromont reported a relatively inline quarter, but growth in overall bookings and backlog resulted in the company going up by 5%~ on earnings day. More on that later.
Overall revenue increased by 1% and earnings per share declined by 7%. A reasonable chunk of the earnings per share decline was due to some one-time non-cash charges from its acquisition of AVL.
On the equipment side of the business, revenue was flat. New equipment sales fell by 5% while used equipment sales fell by 6%. However, this was more than offset by rental revenue increasing by 15% and its product support segment growing sales by 4%.
The company is seeing some success in its “Rental with Purchase Option” RPO segment, growing to $101.4M from the $64.1M last year. The overall operations in this segment weren’t all that bad, but as I mentioned, those acquisition costs above caused a drag on earnings.
Its CIMCO segment, which is the segment that primarily focuses on refrigeration, continues to post double-digit growth.
Overall revenue increased by 13% while operating income grew by 36%, unlike the equipment segment, which is seeing margins compress and operations struggle due to a lagging construction and mining sector. Operating margins increased in the CIMCO segment to 11.9% versus 9.9% last year, which no doubt helped profitability.
Now to what I had mentioned above, bookings and backlog. Here is a chart of their bookings. Notice the large increase from June of 2024.
On the CIMCO side of the business, the company reported outstanding growth. Bookings grew by 185% and the company’s overall backlog increased by 21% to sit at $351M. The bulk of the growth can be attributed to industrial projects here in Canada, and this segment of the business is becoming an under-the-radar growth story. Although it makes up a smaller portion of the business right now, if it continues to grow at this pace, it will continue to take up a bigger chunk of the pie.
When we look to the equipment side of things, bookings increased by 5%, primarily driven by Construction. Mining bookings fell by 51%; however, the company has mentioned numerous times that there is some pressure in this area.
When we look to the company’s equipment backlog, it fell by 4%.
Considering the overall state of the economy, including the construction industry and oil and gas, it is not surprising to see its equipment segment struggling a bit, as infrastructure spending is no doubt being delayed until we see some clarity when it comes to tariffs and the economy.
The company didn’t issue any sort of official guidance, but what I took from the commentary is that the infrastructure outlook remains positive but is delayed by ongoing Canada-U.S. trade uncertainty. The quicker we get a resolution in this regard, the more corporations will begin to spend, and the more equipment orders will likely come down the pipeline for Toromont.
I do believe this is why the company’s Rent to Purchase segment is doing so well. It allows companies to rent the equipment and decide later on if they’d like to purchase. They need it to operate at this point in time, but would like to wait and see before committing to full-out purchases.
Overall, it was a great quarter from the company, who is having an outstanding year.
