Eleven companies with strong sales growth in an inflationary environment

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We are looking for companies that can transfer the full impact of inflation to consumers by boosting prices and increase economic profit

Parex Resources Inc. is an oil and gas exploration and production company that operates primarily in Colombia. With a five-year return on capital of 23.5 per cent, it has shown extremely robust financial performance over that period. The company has experienced massive EVA growth of 729 per cent over the past three months. Parex’s stock price has been more volatile recently due to tax reforms in Columbia targeting oil and gas companies, resulting in a potential tax increase.

Definity Financial Corp. is a property and casualty insurance company that began trading on the TSX in late 2021. The company’s three-year average return on capital stands at 10.9 per cent; the calculation is possible because partial financial statements for 2020 and 2021 became available. With three-month EVA growth of 234.4 per cent, it could be worth keeping an eye on this newly listed company.

Pason Systems Inc. is a supplier of drilling rig instrumentation and data management systems. The company has increased its sales by 50.4 per cent over the past year. This may be attributed to the energy sector’s increased production, a consequence of higher oil prices. Despite this growth, Pason Systems’ price-to-earnings ratio remains relatively low at 8.

Investors are advised to do further research before investing in any of the companies listed in the accompanying table.Anthony Ménard, CFA, is vice-president of data management at Inovestor. Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter.

 

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