Why Atlas Engineered Products (CVE:AEP) Could Be a Multi-Bagger in 2025-2026: Strategic Acquisition Growth and Rising ROCE Trends in a Fragmented Industry

The Canadian truss and engineered products industry is a fragmented landscape, characterized by numerous small players and limited national-scale competitors. This fragmentation creates fertile ground for consolidation, and Atlas Engineered Products (CVE:AEP) is emerging as a strategic acquirer with a clear vision to dominate the market. In 2025, AEP has executed two transformative acquisitions: the $1.575 million purchase of Truss-Worthy Construction Systems in Ontario and the $3.8 million acquisition of Penn-Truss MFG in Saskatchewan [1]. These moves not only expanded AEP’s geographic footprint but also positioned it to capitalize on regional demand imbalances in Canada’s uneven housing market. By securing a presence in key provinces, AEP is building a national network that insulates it from localized economic fluctuations while enhancing its ability to scale operations [1].

The company’s aggressive acquisition strategy is complemented by a gradual but meaningful improvement in its capital efficiency. As of June 2025, AEP’s Return on Capital Employed (ROCE) stood at 4.2%, below the industry average of 7.7% [2]. However, this figure masks a critical trend: over the past five years, AEP’s ROCE has risen steadily, even as capital employed surged by 221% [2]. This growth in capital deployment reflects the company’s reinvestment in automation, infrastructure, and strategic acquisitions, all of which are designed to drive long-term profitability. The CEO, Hadi Abassi, has emphasized that these investments are essential to maintaining market share and preparing for a surge in demand driven by Canada’s $82 billion national housing strategy [1].

AEP’s ability to balance aggressive expansion with improving capital returns is a testament to its disciplined approach. While the company reported a 16% gross margin in the first half of 2025—down from 24% in 2024 due to competitive pricing pressures [1]—its strategic focus on automation and scale is beginning to yield results. For instance, the opening of a robotics facility in Clinton, Ontario, is expected to streamline production and reduce costs, a factor cited by Beacon Securities analyst Russell Stanley as a key driver for doubling AEP’s EBITDA in 2026 [5]. Analysts project Adjusted EBITDA to rise from $9 million in 2025 to $19 million in 2026, supported by a revenue increase from $65 million to $96 million [5]. These forecasts hinge on AEP’s ability to leverage its expanded footprint and automation to capture market share in a sector poised for growth.

The broader industry tailwinds further bolster AEP’s case. Canada’s truss market is projected to grow at a 6.2% CAGR through 2033, fueled by government incentives for affordable housing and a shift toward prefabricated solutions [3]. AEP’s recent acquisitions have already contributed to a 12% year-over-year increase in truss board footage manufacturing, while its quote volumes surged 48% in January 2025 [3]. These metrics suggest strong demand-side momentum, which, when combined with operational improvements, could catalyze a re-rating of AEP’s stock.

Critics may point to AEP’s current ROCE as a drag on valuation, but the company’s trajectory—marked by a 173% stock return over five years despite modest returns—demonstrates that investors are rewarding its growth potential [4]. With the Canadian housing strategy set to unlock demand and AEP’s automation initiatives nearing full implementation, the firm is well-positioned to close the gap with industry peers. For investors seeking exposure to a fragmented sector undergoing consolidation, AEP’s strategic acquisitions and improving capital efficiency make it a compelling multi-bagger candidate in 2025-2026.

**Source:[1] Atlas Engineered Products Reports Second Quarter 2025 Financial and Operating Results, [https://www.newswire.ca/news-releases/atlas-engineered-products-reports-second-quarter-2025-financial-and-operating-results-822235993.html][2] The Return Trends At Atlas Engineered Products (CVE:AEP) Look Promising, [https://simplywall.st/stocks/ca/materials/tsxv-aep/atlas-engineered-products-shares/news/the-return-trends-at-atlas-engineered-products-cveaep-look-p][3] Early Recovery Signals in Canada's Truss Market: Atlas Engineered Products Strategic Positioning for Growth, [https://www.ainvest.com/news/early-recovery-signals-canada-truss-market-atlas-engineered-products-strategic-positioning-growth-2508/][4] The Return Trends At Atlas Engineered Products (CVE:AEP) Look Pretty Impressive, [https://simplywall.st/stocks/ca/materials/tsxv-aep/atlas-engineered-products-shares/news/the-return-trends-at-atlas-engineered-products-cveaep-look-p][5] Is Atlas Engineered Products Stock a Buy?, [https://www.cantechletter.com/2025/08/is-atlas-engineered-products-stock-a-buy/]