This year, we picked this firm as your #1 Aggressive Buy. We feel the company has several advantages that will continue to fuel your gains for many years to come, well beyond 2025.
Those strengths include the company’s ability to acquire smaller firms and improve their profitability. Moreover, many of the former owners continue to run their businesses. That lets FirstService utilize their local knowledge and experience.
FIRSTSERVICE CORP. (Toronto symbol FSV; www.firstservice.com) is your #1 Aggressive Buy for 2025.
The company has two main businesses:
FirstService Brands (59% of its 2024 revenue, 59% of earnings) offers a wide variety of property management services through several franchised businesses, including Paul Davis Restoration (water, fire and mould cleanup), CertaPro Painters (painting and decorating), California Closets (closet and home storage solutions), Pillar to Post Home Inspectors, and Floor Coverings International.
FirstService Residential (41%, 41%) provides property management services such as collecting monthly condominium fees and cleaning/maintenance work. It has 100 offices across 25 U.S. states and three Canadian provinces that manage over 9,000 communities, representing more than 4.5 million residents. The company estimates that it accounts for 6% of the North American property services market. Moreover, its client retention rate is roughly 95%.
The U.S. accounts for 88% of FirstService’s overall revenue, with Canada supplying the remaining 12%. As its businesses sell their services in their local territories, the company has little exposure to tariffs.
FirstService operates in a highly fragmented industry (with many small companies), so it tends to fuel its growth with acquisitions. It cuts risk by focusing on smaller businesses that expand its market share and geographic reach. Moreover, many of the former owners continue to run their businesses. That lets FirstService utilize their local knowledge and experience.
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For example, in 2023, FirstService acquired 12 businesses for a total of $594.4 million (all amounts except share price and market cap in U.S. dollars). Those purchases included its $447.2 million purchase of Roofing Corp. of America. Based in Atlanta, Georgia, this firm provides a variety of roofing services to commercial and residential clients; those include roof replacements and repairs. It added $400 million to FirstService’s annual revenue.
In 2024, the company acquired eight more businesses for $265.05 million. They included two roofing firms in Florida—Crowther Roofing and Hamilton Roofing—that nicely complement Roofing Corp. and will help FirstService take advantage of growing demand in that state for roofing systems that can better withstand hurricanes.
Thanks partly to acquisitions, FirstService’s revenue rose 88.2%, from $2.77 billion in 2020 to $5.22 billion in 2024.
Growth Stocks: Strategic acquisitions fuel revenue and earnings increases
FirstService continues to make acquisitions, in the three months ended March 31, 2025, spending $8.6 million on the purchase of smaller firms. Those new businesses helped lift its revenue in the quarter by 8.0%, to $1.25 billion from $1.16 billion a year earlier. However, that missed the consensus forecast of $1.28 billion.
Thanks to cost controls, earnings before unusual items jumped 38.3%, to $42.07 million from $30.42 million. Due to more shares outstanding, earnings per share rose at a slower pace of 37.3%, to $0.92 from $0.67. That topped the consensus estimate of $0.84 a share.
The company can easily afford to keep making acquisitions. As of March 31, 2025, its long-term debt was $1.30 billion, which is a low 16% of its market cap. It also held cash of $217.2 million.
FirstService’s capital spending rose 21.7%, to $112.8 million in 2024 from $92.7 million in 2023. That’s mainly due to the replacement of certain vehicles and upgrades to its computer systems.
Even so, as a services provider, the company’s annual capital spending is relatively low. That gives it plenty of cash to reward investors.
With the April 2025 payment, the company raised your quarterly dividend by 10.0%, to $0.275 a share from $0.25. The stock has nearly doubled in the past few years, which is why the new annual rate of $1.10 yields 0.6%. FirstService has now increased its annual dividend by at least 10% each year for the past 10 years.
The company continues to benefit as falling interest rates make home renovations more affordable. In 2025, FirstService’s earnings will probably rise 13% to $5.66 a share. It’s also possible that earnings could gain a further 10% to $6.25 a share in 2026. The stock trades at 28.4 times that 2026 forecast. That’s a high but reasonable multiple in light of FirstService’s recurring revenue streams and the high quality of its businesses.
Recommendation in The Successful Investor: FirstService Corp. is a buy.
