I've been researching this company for a while, and I'm very confident that I am right about my thesis .
ADF Group is a 70-year-old Quebec steel fabricator. Not the sexiest company I know. But hear me out because the numbers here are genuinely hard to ignore once you see them laid out.
The company has $572 million in locked-in future work. Zero debt. A 35.8% return on equity. It grew net income 51% last year. It's trading at roughly 5x trailing earnings while growing earnings at nearly 100% per year. And virtually nobody is talking about it.
Here's why the stock is where it is. In April 2025 the company reported a soft quarter — revenue was down because US tariff uncertainty caused clients to pause contract decisions. Stock dropped 27% in a single session. Investors moved on.
What the market completely missed is that the backlog never left. The contracts weren't cancelled. The clients didn't go to a competitor. They paused. And while everyone was moving on, ADF was quietly building the biggest order backlog in its history — $468 million by July 2025, up 60% from January. Then in September they acquired a company called Groupe LAR — an 83-year-old Quebec hydroelectric steel fabricator doing $80.9 million in annual revenue — for $20.4 million. That's a 0.25x revenue acquisition of a debt-free business with $104.5 million in its own backlog. Then in January 2026 they announced another $140 million in new contracts. The combined backlog is now $572 million against a $293 million market cap.
Last quarter they reported $0.36 EPS against a $0.22 estimate. That's a 64% beat. The recovery is happening exactly the way management said it would. Q4 results drop April 9th and if it mirrors Q3 — which management has explicitly guided — the narrative around this stock is becoming hard to ignore.
The one analyst covering this has a $13 price target. That's 22% upside just to reach a target that I personally think is still conservative against the forward earnings picture.
If you want to access the full report, check it out here: https://open.substack.com/pub/yonatanbrunshtein/p/adf-group-inc-drxto-initiation-report?utm_campaign=post-expanded-share&utm_medium=web
Not investment advice. All figures CAD. Do your own diligence $DRX
