THE TOP 1000

 Report on Business Top 1000 Magazine

 This is what value looks like; They're not the sexiest companies you'll ever meet: no glamour, little coverage. But when it comes to profits and prices, these 10 quiet achievers have charms aplenty, John Daly discovers

 JOHN DALY

In the glittering spectacle that is Corporate Canada, the past few years have been especially spectacular for the big guys—spectacular buyouts, spectacular windfalls in resources and real estate, and, for some, spectacular reversals of fortune. Look at the behemoths at the top and bottom of our annual Top 1000 ranking, and many of these triumphs and disasters come to mind immediately.

But what of the smaller and less glamorous lights that don't (yet) post billions in annual profits or losses? They, too, have had to slug it out amid the often-brutal realities of the new global marketplace—intense low-wage competition from overseas, the soaring Canadian dollar, the crumbling U.S. economy and more. Unlike the behemoths, however, they don't have vast amounts of capital and manpower to fall back on. They have to be clever and nimble to prosper.

Many of these smaller outfits produce steady profits and share price appreciation, year after year. Despite soaring stock markets in recent years, most of these companies are still modestly priced, on the right side of the value investor's traditional price/earnings ratio threshold of 20. But if you comb through news archives, pretty much all you will find are brief summaries of their quarterly or yearly earnings. Their CEOs aren't household names either, even in the non-Bay Street locales in which they're headquartered. Quick! You folks in Guelph, Ontario! Who's Bill Hammond?

Well, he runs Hammond Power Solutions, the manufacturer his grandfather, Oliver Hammond, established in 1917. An early specialty was radios, but since 1927, Hammond has concentrated on making transformers. The company's profits have risen more than 700% over the past three years alone—much better, in percentage terms, than the Royal Bank, No. 1 in our Top 1000 ranking, or any of the other giants in the top 10 (see page 78). Yet even Bill Hammond's two teenaged kids aren't all that excited by the family business. “There's a, um, mild interest there,” he says.

Apart from a handful of analysts who track their shares and a few savvy institutional money managers who've profited from them, many investors don't know these companies. Is that fair? No, but that's life. Sometimes, real performance gets no respect. Bill Hammond wouldn't mind a little more publicity, but he can also wait for investors to discover the value in his company. “We're throwing off enough cash that we don't need to go to market,” he says.

A low profile may simply be the price that wallflower companies pay for working in humdrum businesses like transformers, excavation or fertilizer. But it's easy to find out about their stories—all you have to do is call and ask. Here is what we found out.

GLENTEL INC.TOP 1000 RANK 370

2007 REVENUE $222.2 MILLION

PROFIT $10.6 MILLIONTHREE-YEAR SHARE PRICE GAIN 75.5%

Remember when cellphones were as big as a brick and were installed in cars? Back in the mid-1980s, the Skidmore family of Burnaby, B.C., launched a national chain to sell and service newfangled Cantel cellphones. It was a logical fit with Trans Canada Glass (now TCG International), the family's replacement auto glass outfit, founded by Arthur Skidmore and his brother Herbert in 1946.

In 1989, TCG purchased a majority stake in Glenayre Electronics, a wireless product manufacturer that also owned communications networks. Three years later, the family sold the manufacturing operations and renamed the remaining mobile communications interests Glentel Inc. It now has two segments—the business division designs and sells wireless networks for government and corporate clients, the other retails cellphones. The company opened its first WirelessWave kiosk in Vancouver's Metrotown shopping centre in 1997.

Glentel was a train wreck at first—the share price declined from more than $4 to less than 50 cents in late 1999. Just before the tech bubble burst in 2000, the shares shot up past $13, but then plunged below $1 just as fast. “The thing vaporized,” says CEO Tom Skidmore, 58. The sectoral hit was bad enough, but the company had also invested in some fibre-optic plays.

Since then, Glentel has steadily expanded its retail network. The company now owns and operates more than 200 outlets in malls across most of Canada under the banners WirelessWave, the Telephone Booth/La Cabine Téléphonique and Wireless etc. Industry analysts and journalists often fixate on huge manufacturers (Nokia, Motorola) and big service providers (Bell, Rogers). In between, there are millions of confused retail customers. “There are 100 features on a phone, and they operate five of them,” says Skidmore. And the cellphone providers' service plans are Byzantine. This is where Glentel comes in. “We sell knowledge,” says Skidmore.

The business division's voice and data systems, meanwhile, are targeted at users such as oil and gas workers in the field, and even Alaskan fishermen.

The combination of retail and business units has been lucrative for Glentel. Its shares have climbed back to $10 over the past five years, yet are trading at less than 10 times analysts' forecast earnings for this year. Family interests still control just over 50% of the shares, however, and Skidmore figures he isn't done yet. “Can we go outside Canada? Absolutely.”