The Best Stocks To Buy In Canada Right Now – Top 10 Growth Stocks

Stocktrades best stocks to buy in 2017

Building a list of growth stocks on the TSX is no easy task. Mainly because the TSX is primarily dominated by three sectors (financials, energy, and materials) who make up over two-thirds of the market. Financials are for the most part established, low to moderate growth companies. Both energy and materials have had a difficult time over the past few years due to macroeconomic conditions. Although conditions are improving, the outlook for both the aforementioned two sectors is still suspect at best. Further narrowing the field, the list was limited to mid-large companies with market capitalizations in excess of $500 million.

Despite the limited options, there is still some solid growth plays on the TSX. In selecting these companies, we looked at historical performance and expected future growth. We also paid close attention to the company’s market potential and management’s track record of delivering on their expectations. When it comes to investing in growth companies, there is no perfect formula and does require a decent level of assumptions. As per the National Association of Investors Corporation (NAIC), a good barometer for growth companies is projected five-year growth rates in excess of 10%, of which all companies on this list are expected to exceed over the next few years.

Should I be looking at dividend stocks or growth stocks?

This is a question that gets asked a lot in the investing world, and the answer really depends on you. There are benefits and downfalls to both investing strategies and more often than not the best situation you can put yourself in is to have a blend of the two. A combination of stocks from this list and our top dividend stocks in Canada list can create a great foundation for your investment portfolio. We aren’t going to go super in depth on this concept in this article, as it is reserved specifically for growth stocks. But if you are looking for a great article on growth vs dividend stocks, check out Dan’s article at ModestMoney, Dividend or Growth Stocks – The Best Investment.

How risky is growth investing?

The idea behind growth investing is to find companies who are expected to increase their earnings in the upcoming years. The key word in that sentence is expected. Growth investing is much riskier than income(dividend) investing and even value investing. Because you are essentially betting on the future and not the present, the increased volatility can create large swings in your portfolio. This is why it is essential to have a combination of stocks in your portfolio that balance out your risk to a comfortable level.

Growth stocks can be difficult to find. It requires extensive research and patience as too many incorrect decisions can have a detrimental effect on your portfolio. That being said, we decided to do the research for you, and we hope you enjoy our article on the best growth stocks to buy in Canada right now.
 
 

10. Constellation Software

Constellation Software best stocks to buy in Canada 2017


Price As Of Oct 11th 2017: $719.64
Ticker: CSU.TO
Sector: Technology
P/E: 54.24
EPS: $13.27
Market Cap: $15.25 Billion
Net Revenue 2016: $2.13 Billion
Net Profit 2016: $207 Million
Dividend Yield: 0.69%
Click here to see their chart and opinions


Kicking off our list of the best stocks to buy in Canada for 2017 is Constellation Software. Constellation Software specializes in acquiring, managing, and building vertical market software businesses. The company has been on a tear as of late returning 16% YTD and averaging over 100% returns over the past year. Furthermore, the company doubled sales to 1.84 billion from 2012 to 2015 and despite this impressive run, the company still has more to give.

Constellation Software has achieved phenomenal returns primarily through roll-up acquisitions. The company is one of those that has largely flown under the radar for retail investors, but don’t let their share price turn you away. The management have proven to be excellent capital allocators and are extremely disciplined in their acquisitions. Expectations are for 17% earnings growth through 2018.
 
 

9. Badger Daylighting

Badger Daylighting top growth stocks in Canada


Price As Of Oct 11th 2017: $28.25
Ticker: BAD.TO
Sector: Capital Goods
P/E: 27.795
EPS: $1.04
Market Cap: $1.05 Billion
Net Revenue 2016: $404 Million
Net Profit 2016: $29 Million
Dividend Yield: 1.61%
Click here to see their chart and opinions


Coming in at number nine on our list of top growth stocks is Badger Daylighting, North America’s leading distributor of non-destructive excavating services. Badger is somewhat of a contrary pick as the company has struggled over the past couple of years. Revenues have stagnated and EPS have actually decreased by an annualized 25% over the past two years. Despite this financial underperformance, their share price has actually increased by 36% over the same time frame.

Why include them on a growth list? When analyzing growth companies it is important to look forward and in Badger’s case, the future appears to be bright. For starters, their most recent earnings were positive having grown earnings by 150% QOQ on a 35% increase in revenues. After posting an impressive first half in 2017, management expects the momentum to continue into 2018 on the back of improved macro-economic conditions. Analysts expect the company will grow earnings by 20% in 2018 and the company has a targeted EBIDTA growth of 15% over the next 3-5 years.
 
 

8. Canada Goose

Top growth stocks Canada Goose


Price As Of Oct 11th 2017: $26.47
Ticker: GOOS.TO
Sector: Consumer Cyclical
P/E: 184.126
EPS: $0.14
Market Cap: $2.82 Billion
Net Revenue 2016: $404 Million
Net Profit 2016: $22 Million
Dividend Yield: N/A
Click here to see their chart and opinions


Number 8 on our top stocks list is Canada Goose. Canada Goose is one of Canada’s most recent IPOs and has been an incredibly successful one. The company, which began trading on the TSX on March 17 2017 has returned 22.53% to shareholders. Canada Goose is quickly becoming one of Canada’s most prestigious brands and has turned the parka into a must-have fashion item.

What is particularly attractive about the company is that their parkas are becoming a status symbol worldwide. As such, the company has recently announced it is opening flagship stores in Boston and Tokyo, further expanding their worldwide footprint. Furthermore, the company has recently began to focus on selling direct to consumers online, which will positively impact sales volumes and result in higher margins. According to Canada Goose, jackets sold online earn 2 to 4 times more operating income. With continued expansion and a direct to consumer focus, the company is expected to grow earnings by 28% in 2018.
 
 

7. Quebecor

Top growth stocks Quebecor


Price As Of Oct 11th 2017: $47.40
Ticker: QBR.B.TO
Sector: Services
P/E: 24.229
EPS: $1.96
Market Cap: $3.87 Billion
Net Revenue 2016: $4.02 Billion
Net Profit 2016: $249 Million
Dividend Yield: 0.46%
Click here to see their chart and opinions


Lucky number 7 on our list is Quebecor. Canada’s three large telecommunications companies Bell, Rogers and Telus have largely dominated the industry conversation among retail investors. However, investors looking for industry growth need to shift their attention to Quebecor. The company is the largest cable operator in Quebec and owns some of the Provinces most recognizable brands in TVA and le Journal the Montreal and Quebec.

Over the past few years, the company has grown earnings by a whopping 125% on an annualized basis. Although that growth pace will not continue, the expectation is for Quebecor to grow earnings by a respectable 16% in 2018. Compared with the average expected growth rate of 7.5% of the aforementioned big 3 and Quebecor is a more attractive growth investment in this space.
 
 

6. Stantec

Top growth stocks in Canada Stantec


Price As Of Oct 11th 2017: $35.38
Ticker: STN.TO
Sector: Capital Goods
P/E: 34.185
EPS: $1.03
Market Cap: $4.03 Billion
Net Revenue 2016: $3.09 Billion
Net Profit 2016: $131 Million
Dividend Yield: 1.41%
Click here to see their chart and opinions


Coming in as the sixth best stock to buy in Canada for 2017 is Stantec. Stantec provides professional services, such as engineering and architecture services, in the area of infrastructure and facilities for clients in the public and private sectors. They are the third ranked North American Design firm and tenth ranked global design firm generating approximately 3 billion in revenues. Over the past five years, the company has grown revenues by an impressive CAGR of 20%.

The company has a clear growth strategy, that of growth through acquisition. Since 1994, the company has made over 120 acquisitions, and the company expects to maintain revenue CAGR of 15% over the medium term (3-5 years). They expect to achieve this through a combination of organic growth and further acquisitions. Analysts expect earnings to mirror the company’s anticipated revenue growth and expect the company to grow earnings by 17% in 2018.
 
 

5. Dollarama

best stocks to buy in Canada Dollorama


Price As Of Oct 11th 2017: $136.52
Ticker: DOL.TO
Sector: Services
P/E: 33.06
EPS: $4.13
Market Cap: $15.34 Billion
Net Revenue 2016: $2.96 Billion
Net Profit 2016: $446 Million
Dividend Yield: 0.32%
Click here to see their chart and opinions


Caught in the middle on our list of the best growth stocks to buy in Canada is Dollarama. Dollarama has been one of Canada’s most impressive growth companies over the past 5 years. Since 2013, the company has grown EPS by an annualized average of 26%. Likewise, the company’s share price appreciation has been even more impressive with a CAGR of 65% over the same time frame. The company continues to target a high number of store openings, which will increase their footprint and they have proved capable of shifting their product mix to higher margin items.

As they continue to mature, it is perhaps not realistic to expect them to continue their blistering growth pace but their expected growth rate is still impressive. Analysts expect earnings to grow by approximately 20% in 2018 and then by another 16% in 2019. Perhaps those estimates may be a little conservative as in September, the company beat expectations and revised growth margin estimates to the upside which in part helped drive a 30% increase in quarterly EPS.
 
 

4. Intact Financial

Best growth stocks Intact Financial


Price As Of Oct 11th 2017: $102.98
Ticker: IFC.TO
Sector: Financial
P/E: 20.25
EPS: $5.08
Market Cap: $14.33 Billion
Net Revenue 2016: $8.44 Billion
Net Profit 2016: $541 Million
Dividend Yield: 2.49%
Click here to see their chart and opinions


Coming in at number 4 is Intact Financial. Intact Financial is one of Canada’s lesser known insurance companies. The company specializes in P&C insurance offering a range of car, home, and business insurance products. Intact’s share price has delivered a respectable 6% growth this year but the company’s share price has not kept up with its anticipating earnings growth. Their PEG ratio is 0.80 and a PEG ratio lower than 1 typically means a company is trading at a discount to their growth rate and can be considered undervalued.

The company has targeted net operating income growth of 10% annually and their most recent OneBeacon acquisition is also expected to add to operating income upon closing. Analysts agree as they expect the company to grow earnings by 25% in 2018. With a current P/E of 20 and a dividend yield of 2.5% that is growing at an annualized rate of 10%, Intact Financial is well positioned to reward investors.
 
 

3. Canopy Growth Corporation

Canopy Growth Corporation Growth Stocks


Price As Of Oct 11th 2017: $13.59
Ticker: WEED.TO
Sector: HealthCare
P/E: Negative
EPS: $-0.10
Market Cap: $2.20 Billion
Net Revenue 2016: $40 Million
Net Profit 2016: $17 Million
Dividend Yield: N/A
Click here to see their chart and opinions


Getting into the top 3 is Canopy Growth. Canopy Growth, outside of having one of the most recognizable tickers on the TSX, is well positioned to take advantage of Canada’s impending legalization of marijuana. Quite simply, the company is in the business of producing and selling legal marijuana in the Canadian market. It is difficult to evaluate a company such as this on fundamentals.
 
Despite its 35%+ share price appreciation YTD, the company should continue to reward investors as legalization gets closer and closer to reality. In their most recent earnings release, the company practically doubled the amount of cannabis sold YOY and increased revenues 127%. Although the company has posted losses in each of its 3 years as a publicly traded company, this is the norm for high growth companies. That being said, analysts expect the company to post their first profits in 2019.
 
 

2. Parkland Fuel Company

Best stocks to buy in Canada Parkland Fuel


Price As Of Oct 11th 2017: $25.47
Ticker: PKI.TO
Sector: Services
P/E: 64.77
EPS: $0.40
Market Cap: $3.35 Billion
Net Revenue 2016: $6.26 billion
Net Profit 2016: $45 Million
Dividend Yield: 4.51%
Click here to see their chart and opinions


The runner up on our list of the best stocks to buy is Parkland Fuel. Parkland Fuel Corporation distributes and markets fuels and lubricants. The Company delivers refined fuels and other petroleum products to motorists, businesses, consumers, and wholesale customers. They are Canada’s largest and one of North America’s fastest independent marketers of fuel and petroleum products. Although the company’s share price has lost approximately 10% in value YTD, the company is expected to ramp up earnings. Thus far in 2017, Parkland beat earnings estimates in both Q1 and Q2 and analysts expect Parkland’s earnings to grow 56% in 2018.

The company’s growth is primarily driven through acquisitions as is evident by their most recent purchase of Chevron Canada’s Downstream fuel business which makes them the exclusive distributor of Chevron-branded fuels. The deal is expected to accelerate cash flow by 30% and add an additional $50 million to EBITDA. This acquisition, which complements their earlier acquisition of CST brands from Alimentation Couche-Tard has rapidly expanded the company’s assets and footprint. Next year should be a monster year for the company.
 
 

1. Shopify

Best stocks to buy in Canada Shopify


Price As Of Oct 11th 2017: $118.40
Ticker: SHOP.TO
Sector: Technology
P/E: Negative
EPS: $0.64
Market Cap: $11.41 Billion
Net Revenue 2016: $389 Million
Net Profit 2016: $35 Million
Dividend Yield: N/A
Click here to see their chart and opinions


Stocktrades best stock to buy for growth in 2017 is Shopify. Shopify has been one of Canada’s most successful IPO’s in recent years returning over 300% since its May 29 2015 listing on the TSX. Shopify is best classified as a cloud-based, multi-channel commerce platform. This platform is used by over half a million businesses in over 175 countries. Since 2012, they have experienced 74% annual merchant growth and major brands such as Canadian Tire, P&G, GE, and Tesla use their product.

Despite the huge growth over the past few years, the company still has room to run. To put it into perspective, their current 500K customer base pales in comparison to the approximately 50 million small to medium size businesses across Canada, the U.S. and Europe. Also many larger businesses such as the ones listed above that are recognizing the value of Shopify’s platform. Yep, they currently operate at a loss, but analysts also expect the company to post a profit in 2018.
 

What can I expect to see investing in these stocks?

 
Like we mentioned at the start of this article, there is always a higher amount of risk when investing in growth stocks. That being said, you can expect to see these stocks flourish in 2017 and beyond due to strong fundamentals indicating they are on the up and up. You can expect to see a decent amount of volatility in these stocks until they have become further established. That being said, the most profitable strategy when purchasing these stocks is a buy and hold method, unless fundamentals have changed.

If you’re just getting started and don’t quite know how to get involved in the stock market, check out our article on how to buy stocks. If you’re looking for a brokerage that has these stocks, check out our review on Questrade, or our general review on the top discount stock brokers in the USA and Canada.

So what stocks are you investing in in 2018 for growth? Let us know if you agree with us in the comments below! If you have any other suggestions, feel free to throw them in the comments section as well and we will review your submission!

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