Identifying the next multi-bagger in the stock market often involves assessing key trends, such as growing return on capital employed (ROCE) and expansion in capital employed. Canadian Natural Resources (TSE: CNQ) catches our attention with its impressive ROCE trend, signaling potential for significant returns for investors. Let's dive deeper into this analysis to understand the company's performance and prospects. 

Understanding Return on Capital Employed (ROCE)   

ROCE is a critical metric that measures a company's annual pre-tax profit relative to the capital employed in its business. For Canadian Natural Resources, the ROCE calculation involves dividing earnings before interest and tax (EBIT) by total assets minus current liabilities. With an ROCE of 13%, Canadian Natural Resources surpasses the Oil and Gas industry average of 9.8%, indicating strong performance relative to its peers. 

Analyzing ROCE Trend 

Canadian Natural Resources' ROCE growth is particularly noteworthy, with a 54% increase over the last five years despite relatively flat capital employed. This upward trend in ROCE signifies improved efficiency and profitability, highlighting the company's ability to generate higher returns from existing capital. While this is a positive indication of operational efficiency, it's essential to assess the company's investment opportunities for sustainable growth. 

Implications for Investors 

The upward trajectory of Canadian Natural Resources' ROCE is a positive sign for investors, reflecting the company's ability to enhance efficiency and deliver higher returns, and boding well for TSX energy stocks in general. The remarkable 194% total return for CNQ over the last five years further underscores investor confidence in the sector's prospects. As investors anticipate continued growth and profitability across the TSX energy space, Canadian Natural Resources stands out as an attractive investment opportunity worth exploring, but it's important to remember that diversification is key when investing in any sector. 



Conclusion 

In conclusion, Canadian Natural Resources (TSE: CNQ) stands out as a potential multi-bagger candidate, driven by its impressive ROCE trend and strong performance in the Oil and Gas industry. The company's ability to generate higher returns from existing capital underscores its operational efficiency and growth potential. With investor confidence on the rise and expectations for continued success, Canadian Natural Resources offers promising prospects for long-term investors seeking significant returns.