When we named Ag Growth International Inc. one of our October 2014 Best Buys, it was trading below CAD44 (or about USD40 at prevailing exchange rates). As if on cue, the stock started to rise. By December 24, it had hit CAD57.18 (USD49.19), good for a 2½-month total return of 25.8% in U.S. dollar terms.

About a month after our recommendation, the farm equipment maker reported outstanding third-quarter results, including a solid outlook for its core North American business. There were plans sprouting overseas, too, particularly in Brazil, where Ag Growth was cooking up an aggressive expansion, continuing its strategy of pushing into international markets.

Brazil’s potential is huge: Its annual grain haul rivals that of the U.S., yet it has a fraction of North America’s crop infrastructure.

Enter Ag Growth (TSX: AFN, OTC: AGGZF), which makes the grain-handling gear—including augers, conveyors, storage bins and conditioning machinery—Brazil needs to hit its potential.

Second Chance to Buy

However, Ag Growth sold off sharply after releasing its fourth-quarter and full-year 2014 results, as earnings per share (EPS) missed the consensus estimate (more on that below).

In two days, from March 11 to March 13, the day of the earnings announcement, the stock plunged from a 12-month high of CAD57.72 to CAD51.66. On April 8, it closed at CAD49.82.

That’s a loss of 13% on the Toronto Stock Exchange and more than 11% in U.S. dollar terms. (The Canadian dollar is up modestly versus the U.S. dollar over the past month.) Ag Growth now yields 4.8% and trades at 15.3 times its estimated 2015 earnings.

But the drop hasn’t fazed Canada’s Bay Street analyst community: It has seven “buy” ratings on the stock, one “hold” and no “sells.” With an average 12-month target price of CAD59.83, Bay Street sees 25% upside from here, including the current annualized dividend rate of CAD2.40 per share.

Deep Roots

Ag Growth saw huge growth in its international division from 2007 through 2013, with sales surging from CAD6 million to more than CAD90 million on rapid expansion in Eastern Europe.

The Ukraine crisis slowed things down last year, but despite the turmoil, Ag Growth’s big clients in the region are sticking with their long-term investment programs. The company’s recent efforts in Latin America—including Brazil—will also broaden its international business, helping shield it from unpleasant surprises in any one region.

Meanwhile, Ag Growth is investing heavily in its current businesses. For example, it’s now building new factories for its Hi Roller conveyor belt division and its Union Iron Works unit. Both projects are slated to come online in the second half of 2015.

But external growth is also key, and the company is an active acquirer: In February 2014, it bought the REM GrainVac line of grain vacuums, which it will make at a recently purchased 114,000-square-foot facility in Saskatchewan, alongside its Batco conveyor belts.

To top it off, it’s in the final stages of closing its CAD221.5-million deal to buy grain-storage outfit Westeel, announced in November.

Healthy Demand

Last-minute delays in international shipments affected the company’s fourth-quarter financials. But Ag Growth—anchored by its North American operations—still posted record trade sales (or sales net of the gain or loss on foreign exchange) and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the end of 2014.

Trade sales rose 14.3% to CAD409.7 million, while adjusted EBITDA gained 21.7%, to CAD78.2 million. Adjusted EPS jumped 51.7%, to CAD2.64.

As for 2015, management expects first-quarter results to get a boost from strong North American demand, with adjusted EBITDA in line with the record levels set a year ago. What’s more, the company sees robust demand holding up into the second half of the year.

And judging by its backlog and the number of quotes it’s writing for customers, the international business will chip in with sharply improved results, too.

Ag Growth is a Buy for long-term growth and income up to USD48.

Loading Up

TransForce Inc. (TSX: TFI, OTC: TFIFF) started snapping up smaller trucking and logistics companies in 2009, in the early aftermath of the global financial crisis.

Under visionary CEO Alain Bédard, it has since grown into Canada’s largest trucking company—about three times bigger than its next-largest rival—and it controls more equipment on the country’s highways than the next five largest carriers combined.

Last year it pulled off its biggest deal yet, buying Contrans Group for CAD495 million. The move established TransForce as a diversified logistics powerhouse with the scale to drive its continental ambitions.

But its evolution is about more than size: It has also transformed from a basic less-than-truckload (LTL) operator into a diversified firm operating in various areas of the transportation business, including LTL, courier and waste management.

Deals to acquire Vitran, Clarke Transport and Clarke Road Transport have driven the company’s revenue, earnings and dividend higher, in addition to growing its intermodal LTL business. Clarke also added another specialized business line: steel.

Scale Drives Growth…

Thanks to the company’s recent purchases, its 2014 revenue rose 19.5%, to CAD3.7 billion, while EPS surged 39.8%, to CAD1.51. Free cash flow per share was CAD3.24, up from CAD2.41 in 2013.

TransForce also marked its first billion-dollar sales quarter during the last three months of the year.

Following a string of deals in 2014, management is now focused on boosting efficiency. But that doesn’t mean it’s finished on the acquisition front: it’s still keeping an eye out for reasonably priced takeover targets.

It will also use its extremely solid free cash flow to pay down debt, another main priority this year. And it will keep returning cash to shareholders, as per its stated policy.

Meantime, management expects solid U.S. economic growth to benefit its operations south of the border. A weaker Canadian dollar should also drive a modest recovery in the Great White North’s manufacturing sector, helping TransForce’s core Canadian truckload and LTL segments.

…At a Reasonable Price

Priced to pay 2.3% at current levels, TransForce is more of a dividend-growth story than a high-yield story. And that’s fine. In fact, it’s great, particularly if you’re concerned about rising interest rates.

The stock also represents good value, trading at 15.36 times estimated 2015 earnings.

TransForce is a Buy under USD27.