When it comes to Canadian stocks that can truly crush the market, a winning combination of financial strength, strategic growth, and shareholder returns is critical. Companies that stand out often display consistent revenue increases, smart acquisitions, strong profit margins, and the ability to adapt to changing markets.

TFI International (TSX:TFII) embodies these qualities. This makes it a strong contender for investors looking to outperform not just the TSX but global markets as well. With its position as a leader in the transportation and logistics industry, TFI has proven time and again that it can navigate economic challenges and emerge stronger, driving shareholder value through both organic growth and acquisitions.

Into earnings

Recent earnings reflect TFI's resilience and ability to capitalize on its market opportunities. In its third-quarter results, the Canadian stock posted revenue of $2.18 billion, representing a significant 14.3% year-over-year increase. This growth was largely fuelled by its recent acquisitions, including Daseke. This strengthened its Truckload segment and expanded its reach across North America.

While revenue surged, net income came in slightly lower at $128 million, or $1.50 per share, compared to $133 million, or $1.54 per share, in the same quarter last year. This slight dip in profitability reflects some margin pressures, likely from rising fuel costs and inflationary headwinds. Despite this, TFI's top-line growth remains an encouraging sign, showcasing the benefits of its strategic moves and steady demand for its transportation services.

TFI's ability to reward its shareholders sets it apart as well. The Canadian stock announced a 13% increase in its quarterly dividend, bringing it to $0.45 per share. This marks another consistent hike in its payout, reflecting management's confidence in the Canadian stock's financial health and ability to generate cash flow. With a payout ratio of just under 30%, TFI has ample room to grow dividends further while also reinvesting in the business.

Looking ahead

A key driver of TFI International's success lies in its acquisition strategy. The Canadian stock has a proven track record of buying undervalued businesses, integrating them efficiently, and extracting maximum value. In 2024 alone, TFI acquired Hercules Forwarding, Groupe CRS Express, and Daseke, enhancing its capabilities in the freight and logistics space. These acquisitions not only added significant revenue. These also broadened TFI's customer base and geographical reach. Importantly, TFI has excelled at optimizing the operations of its acquisitions, trimming costs, and improving efficiencies.

The outlook for TFI International remains promising. Analysts have pegged a 12-month average price target of $164.38. This represents an upside potential of nearly 9% from current levels at writing. Earnings per share (EPS) are expected to grow by 23.2% annually over the next few years. Meanwhile, revenue growth is forecast at around 7% per annum. These projections are underpinned by TFI's diversified operations across North America, its focus on high-growth segments such as last-mile delivery and e-commerce, and its ability to deliver steady cash flow through various economic cycles.

Over the past year, TFI International's share price performance has also reflected its strength. The stock is up over 33% from its 52-week low of $157.33, nearing its recent high of $221. Its ability to outperform in a volatile market speaks volumes about investor confidence and the company's strategic direction. Even with a trailing price-to-earnings (P/E) ratio of 27.78, which may appear high, TFI's forward P/E of 19.65 suggests the stock is reasonably valued, especially given its growth potential. Furthermore, it offers an operating cash flow of $1.1 billion and levered free cash flow of $481.91 million. This gives TFI the liquidity to fund future growth while comfortably managing its debt, which sits at $3.17 billion.

Bottom line

For those seeking a Canadian stock capable of crushing the market, TFI International checks all the right boxes. Its combination of steady revenue growth, strategic acquisitions, disciplined cost management, and shareholder-friendly policies make it a standout in the TSX.

The broader market wrestles with uncertainty. Yet TFI has continued to deliver, showcasing its ability to outperform competitors and reward its investors. As the transportation and logistics industry evolves, TFI's proactive strategies and focus on profitability ensure that it remains ahead of the curve, making it a strong option for long-term investors looking to capitalize on a Canadian success story.