This long-time favourite offers exceptional value through its deep-rooted dealer relationships and recurring revenue model that generates predictable cash flows across economic cycles. The company commands pricing power and customer loyalty that few industrial businesses can match while its aftermarket parts and service business provides stable, high-margin revenues that smooth cyclical volatility.
With government infrastructure spending accelerating across North America and energy transition projects requiring decades of heavy equipment deployment, the firm sits at the intersection of multiple secular tailwinds that should drive earnings growth for years to come.
The shares trade at 30.4 times estimated 2026 earnings. That valuation appears premium to typical industrials but is justified by the company’s exceptional business quality, predictable earnings stream, and growth trajectory. The multiple reflects the scarcity value of exclusive dealership territories, the defensive nature of recurring service revenues that comprise a significant portion of profits, and strategic exposure to infrastructure modernization and electrification megatrends that will unfold over decades.
TOROMONT INDUSTRIES LTD. (Toronto symbol TIH) operates through two business segments:
Toromont’s Equipment Group (90% of revenue) is the exclusive dealer of Caterpillar heavy equipment, such as bulldozers, backhoes and excavators, for eastern Canada. The company is also the MaK engine dealer for the Eastern Seaboard of the U.S., from Maine to Virginia.
The company’s CIMCO business (10%) is a market leader in the design, engineering, fabrication, installation and after-sale support of refrigeration systems in industrial and recreational markets.
Toromont often uses acquisitions to enhance its market share.
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For example, in September 2024, the company paid $77.6 million for Tri-City Equipment Rentals. That firm rents heavy equipment across Southwestern Ontario.
In January 2025, Toromont acquired 60% of AVL Manufacturing Inc. This private firm, based in Hamilton, Ontario, makes specialized enclosures for power generators and heating equipment. It sells these products to industrial customers in eastern North America, including oil and gas producers, automakers, construction firms and datacentre operators. The company paid $67.5 million in cash plus common shares worth $12.8 million, for a total of $80.3 million. It will also buy the remaining 40% by 2031, with the final price based on AVL’s performance.
Growth Stocks: AVL acquisition adding to growth
In the quarter ended December 31, 2025, Toromont’s revenue rose 8.8%, to $1.42 billion from $1.31 billion a year earlier. That topped the $1.38 billion consensus forecast. Revenue at the Equipment Group (91% of the total) rose 8.7% thanks to the AVL purchase (it contributed $98.0 million) and stronger demand for new equipment from construction companies. CIMCO’s revenue (9%) also gained 10.0% on higher deliveries. Due to the costs related to the AVL acquisition, Toromont’s earnings in the quarter improved just 0.5%, to $1.91 a share (or a total of $157.2 million) from $1.90 a share (or $156.3 million). That still beat the consensus estimate of $1.89 a share.
Toromont is in a strong position to keep making acquisitions. It ended 2025 with cash of $1.33 billion, and its long-term debt is just $796.4 million.
The stock has jumped over 81% in the past year. It now trades at 30.4 times the $6.94 a share that Toromont will probably earn in 2026. While high, that’s still an acceptable multiple considering the company’s leading market share and Canada’s plan to increase spending on infrastructure projects. What’s more, Toromont is raising your quarterly dividend by 7.7%. Starting with the April 2026 payment, shareholders will receive $0.56 a share instead of $0.52. The new annual rate of $2.24 dividend yields 1.0%.
The company has now increased the annual rate for 37 consecutive years. It has also paid dividends every year since becoming a public company in 1968.
Recommendation in The Successful Investor: Toromont Industries Ltd. is a buy.
