Finding the best Canadian stocks to buy can be a challenging endeavor. The TSX has been known for its lackluster returns in comparison to the American markets, and in order to find profitability here at home you simply need to find the best possible Canadian stocks out of a multitude of industries. I think I’ve done so with this piece, and if you’re interested in buying stocks, you should check out this list of 31 of the best.
So how did I pick these Canadian stocks?
These Canadian stocks are primarily chosen for their excellent growth potential. But, things like industry outlook and dividend returns also played a key part. Using our exclusive screener here at Stocktrades Premium, I can easily weed out the solid Canadian stocks from the poor ones, and bring the best of the best to my desktop right when I need them. This is one of the driving factors to how I earned over 38% on my TFSA in 2019.
In fact, several of these stocks were spotted and relayed to premium members before doubling in less than a year. One even gained more than 200%! If you’re interested, check out Stocktrades Premium here.
**Writer Daniel Kent is long SU, ENB, CTC-A, SHOP, TD, SIS, TFII, PKI, GOOS, PLC
Canadian Stocks To Buy For 2020:
31. Tourmaline Oil Corp (TSX:TOU)
Tourmaline Oil Corp (TSX:TOU) is an oil and gas exploration and production company. The company is focused on three core areas: the Alberta Deep Basin, Northeast British Columbia Montney and the Peace River Triassic Oil Complex.
The company has a very attractive profile of low-cost assets in Canada’s Western Canadian Sedimentary Basin. It has a large and probable reserve of 140%, which leads to plenty of low-cost development opportunities. With over 1.8 million acres of land, Tourmaline ranks itself as the third largest land-owner of any producer.
The company is prepared for significant organic growth, most of which will be funded by internal cash flows.
As of today, the company is trading at a discount trading at a forward price to earnings of only 8.95, a price to book of 0.34 and a 5 year PEG ratio of 1.75.
We can attribute most of this to the weakness in the Canadian oil and gas sector. Analysts are bullish on the company, expecting annual earnings growth of 16% over the next five years. The company’s dividend is healthy, yielding 4.39% at the time of writing with a payout ratio of only 38%.
Add to this nearly 100% upside at today’s price levels (based on analysts estimates), and you have one of the best Canadian stocks to buy in the oil and gas sector.
Mkt Cap: $2.64 Billion
YTD Gains: -35%
Fwd P/E: 8.95
1Yr Price Target: $20.13
30. Air Canada (TSX:AC)
Air Canada (TSX:AC) is one of Canada’s most popular stocks, and Canada’s biggest airline. The company tempered its guidance for 2019 in the wake of the Boeing 737 MAX aircraft turmoil, but it reassured investors that guidances will stay in place for 2020 and 2021.
Air Canada has a consistent track record of meeting or beating earnings and revenue estimates. You would have to go back to September of 2018 to find its last earnings miss.
As one of the top two rated stocks from last year, it grew 86% in 2019 exceeding even our own expectations – expectations that remain high. Analysts expect the company to grow earnings by approximately 30% over the next couple of years. However, recent events such as COVID-19 may effect this. We will have to keep a keen eye on Air Canada moving forward.
Air Canada also happens to offer excellent value. It is trading at only 5.48 times earnings and has a PEG ratio of 0.19. Although its price can be highly volatile and is susceptible to rising oil prices, it remains a strong candidate to outperform once the dust settles on the COVID 19 and the oil price war.
Mkt Cap: $8.3 Billion
YTD Gains: -38.80%
Fwd P/E: 5.48
1Yr Price Target: $52.08
29. Badger Daylighting (TSX:BAD)
Badger Daylighting (TSX:BAD) is the leading distributor of non-destructive excavating services. The company is best known for its technology, the Badger Hydrovac, which is used for digging in congested grounds and challenging conditions. The company provides hydrovac services to various clients in North America.
Over the years, the company has provided an excellent business model and as an industry leader, it is given a significant competitive advantage vs its peers. The primary growth strategy is south of the border, where it expects to double its U.S. operations over a period of three to five years. To do this, the company must grow its U.S. sales at a rate of 32% and so far it is keeping up with that pace.
The company pays a modest 1.8% dividend and a payout ratio of only 30% signals that the dividend is healthy. The company has raised dividends for 5 straight years and has a 5 year dividend growth rate of 7%. In terms of growth, analysts expect Badger to grow by nearly 27% over the next year, and have labelled the company with 26% upside potential from today’s price.
Keeping an eye on Badgers sales in the United States will give an investor a good indication of which direction the company’s growth is headed.
Mkt Cap: $981 Million
YTD Gains: -20%
Fwd P/E: 13.62
1Yr Price Target: $44
28. Boyd Group Services (TSX:BYD)
Boyd Group recently converted from an open ended mutual fund trust to a corporation. It operates in the automotive industry, particularly automotive and glass repair. The company operates in five Canadian provinces and over 25 states.
Over the past year, the stock has almost doubled (86%) and it has been one of the best performing stocks on the TSX Index. Over the past five years, it has returned 387% and it as the second-best peforming stock of the last decade with returns north of 4,000%!!
The reason for Boyd being so enticing is simply the fact that regardless of economic conditions, vehicle repairs are being made. Most auto collision repairs are paid for via insurance claims, which provides a steady stream of revenue.
Boyd has a knack for buying up small time shops, renovating them and reducing their expenses and then slapping its brand on the store. This has proven to be extremely lucrative for the company, and I would expect larger expansions moving forward.
Boyd is one of the largest companies in the auto industry, and as such analysts expect big growth moving forward. Boyd is slated to grow by 19% over the next year, right in line with its 21% growth from the previous 5 years.
Mkt Cap: $4.07 Billion
YTD Gains: -1.5%
Fwd P/E: 36.90
1Yr Price Target: $232.50
27. Alimentation Couche-Tard (TSX:ATD.B)
Alimentation Couche-Tard (TSX:ATD-B) is the largest convenience store operator in Canada and the second largest in North America. While constantly expanding its presence in the US and Europe, it successfully built a convenience store including daily use products. Many stores are also combined with fuel service stations. ATD operates 12,575 stores (9,794 in North America, Europe and Russia, and 2,150 in other international markets.)
The company’s main strength lies in its ability to acquire and integrate convenience stores in Canada and across the world and shape them almost instantly with its own branding. Couche-Tard is not buying other stores to face the competition or because management needs to follow the parade.
In fact, ATD IS the parade. It is the leader in the market and dictates its vision. The stock would be much higher on this list if we had gotten to it before its outperformance as of late. Prior to the crash, the stock had increased over 24% in value, primarily driven by solid earning reports and store growth.
The stock is trading at 18 times forward earnings and earnings are expected to dip next year. There is a lot of growth priced into this stock, yet the stocks price hasn’t dipped much in this recent crash. Analysts have nearly 50% upside on the stock over the next year.
Mkt Cap: $45.86 Billion
YTD Gains: -3%
Fwd P/E: 18.6
1Yr Price Target: $61.22
26. Parkland Fuels (TSX:PKI)
Parkland Fuels (TSX:PKI) is Canada’s largest and one of North America’s fastest independent marketers of fuel and petroleum products. The company’s growth is primarily driven through acquisitions and is evident by its purchase of Chevron Canada’s Downstream fuel business making them the sole distributor for Chevron branded fuels.
Parkland has been growing at an impressive pace, and its ability to make synergistic acquisitions is paying off in the form of dividend growth and stock appreciation. The company is a Canadian Dividend Aristocrat, having raised dividends for seven consecutive years.
With a yield of 2.99% and a payout ratio of only 60% its dividend is healthy and growing.
Analysts are bullish on the fuel distributor and are expecting double-digit upside. It has been very aggressive and buying up whatever it can get its hands on. As a result, its share price had doubled in only three years prior to the recent market crash.
Mkt Cap: $4.761 Billion
YTD Gains: -32%
Fwd P/E: 26.45
1Yr Price Target: $50.30
25. Canadian Tire (TSX:CTC.A)
Canadian Tire (TSX:CTC.A) has been a Canadian staple. It is one of Canada’s biggest retail chains in recent history. Canadian Tire has over 1698 stores across Canada, including popular brands such as Marks Work Warehouse. One key difference that separates the company from other retailers is its ability to prevail as a brick and mortar retailer in the face of an online boom.
The company’s branding strategy, along with key acquisitions of companies mentioned above like Marks and Helly Hanson have helped the retailer continue to bring people into its stores.
People aren’t ordering tires or appliances online, and they generally like to try on expensive clothing prior to buying. Its Mastercraft brand provides cheap power and hand tools to consumers not looking to spend a fortune, and technological advancements in the company’s product department have been proven key to getting people into the stores and buying from them instead of online giants like Amazon.
Analysts like what they see in Canadian Tire and have placed a one-year target price of $176, which works out to 46% upside on the retail giant. Combine that with a 3.52% dividend yield and a five-year dividend growth rate of over 17% and Canadian Tire is a Canadian stock you need to be looking at.
Mkt Cap: $7.56 Billion
YTD Gains: -13.6%
Fwd P/E: 7.76
1Yr Price Target: $176
24. Dollarama (TSX:DOL)
Dollarama (TSX:DOL) was at one point one of the hottest stocks to own in Canada. With surging growth, it seemed like there was nothing that could stop the company. Although growth has slowed, it still presents investors with attractive growth opportunities.
The company is expected to grow by double-digits in both sales and revenue over the next five- years and is trading at 20 times earnings and 3.8 times book value. It’s expensive valuation is one of the reasons it still remains high on this list.
Analysts are bullish on the discount retailer with 9 “buys” and 2 “strong buys” and have an average one-year price target of $47.90 per share. Dollarama is one of those rare consumer defensive stocks that should perform regardless of economic condition.
Thus far, it has stemmed the tide of increased competition and has even started to take chunks of business for traditional grocery stores.
Mkt Cap: $13.01 Billion
YTD Gains: -9.5%
Fwd P/E: 20.74
1Yr Price Target: $47.90
23. Enbridge (TSX:ENB)
Enbridge (TSX:ENB) currently operates the longest pipeline in North America. In 2017, the company merged with Spectra to create an energy infrastructure company. About 2/3 of Enbridge’s earnings are generated through oil sands (liquid pipeline) distribution while the other 1/3 come from natural gas transmission.
The company currently has 10 projects on the book through 2022 worth more than $11 billion. A good majority of Enbridge’s growth prospects are tied to the Line 3 Expansion project. It received good news from regulators recently and assuming no setback, it could enter operation as soon as 2021.
Enbridge is typically held by investors looking to collect a handsome dividend, and right now the company is yielding 6.27%. The company has a dividend growth streak of 24-years and is expected to grow the dividend by 5-7% annually – inline with distributable cash flow growth.
The stock is extremely popular in Canadian ETFs, and is widely regarded as one of the best Canadian stocks to own for income.
Mkt Cap: $85.89 Billion
YTD Gains: -18%
Fwd P/E: 14.94
1Yr Price Target: $57.36
22. Suncor Energy (TSX:SU)
Suncor Energy (TSX:SU) is an integrated energy company that focuses on three key segments: Refining and Marketing, Oil Sands, and Exploration and Production. The company refines crude oil and markets petroleum and petrochemicals in Canada. In terms of revenue, Suncor is the largest energy company in the country. Suncor is dual listed, meaning you could own the NYSE version and save money using Norbert’s Gambit.
Because Suncor has an integrated business model, the company can send oil production to its own refineries in the U.S., which is exposed to WTI and Brent pricing, avoiding the weak WCS Canadian oil prices. The recent oil and gas bear market has left a lot of Canadian oil companies trading at deep discounts, Suncor included.
The company is trading at 9 times forward earnings, 0.98 times book and has a 2 year PEG of 2.18. Suncor offers one of the best dividends in the country, with a yield around 5.3%, and takes up only 54% of free cash flows.
Suncor has 80% upside according to analysts, and an investment in Suncor now could provide outsized returns once the industry rebounds. Not to mention, you get to lock into an amazing dividend.
Mkt Cap: $41.07 Billion
YTD Gains: -36.6%
Fwd P/E: 9.16
1Yr Price Target: $48.86
21. Canadian Natural Resources (TSX:CNQ)
Canadian Natural Resources (TSX:CNQ) is an independent crude oil and natural gas exploration, development and production company. Canadian Natural prides itself on being a low-cost producer that has a very balanced and diversified product base.
Recently, the company has been buying up Canadian oilsands assets at an extensive pace. In 2017 the company purchased Shell’s Canadian oilsands assets and in early 2019 the company also purchased Devon’s North American oil assets.
Canadian Natural is taking advantage of a weak economy when it comes to oil and gas and stacking up assets for an inevitable recovery. One thing we really like about Canadian Natural is its ability to provide consistent free cash flows. In 2019, it expects to generate over $6 billion in free cash flow.
The turmoil in the oil and gas industry has left CNRL trading at a deep discount, and investors can take advantage of this and buy a stock that both provides solid growth and income prospects.
Trading at only 8 times forward earnings and 0.71 times book, analysts have placed a 1 year target estimate of $45.01 on the company, which indicates over 100% upside from today’s pricing.
Along with that, investors can reward themselves with a 5.2% dividend yield, one that is easily covered by cash flows. Along with this is a five-year dividend growth rate average of 11% and a 19-year dividend growth streak.
Oil stocks have taken a beating as of late, so keep in mind Canadian Natural is a mid to long term play.
Mkt Cap: $24.775 Billion
YTD Gains: -49%
Fwd P/E: 8.12
1Yr Price Target: $45.01
20. CGI Inc (TSX:GIB.A)
CGI Group (TSX:GIB.A) is Canada’s largest technology outsourcing company, and easily one of the best Canadian stocks to buy today. The company focuses on the management of IT services and integration and sales of software solutions for businesses. A global company, CGI operates in multiple regions of the world including North America, Europe and Asia.
For companies that sell services and not physical products, it is very important to look at a company’s backlog and book to bill ratio. This is because CGI Group relies heavily on contract income to drive revenue and growth. The company has a healthy backlog totally $22.6 billion, which is equal to 1.91 times 2019 revenue.
With a book to bill ratio of 104.1%, there is more demand for CGI’s services than there is supply. CGI has grown earnings by 10% annually and has achieved a CAGR (compound annual growth rate) of nearly 20%. CGI’s goal is to double in size over the next 5 years, and its CAGR is right in line to do so.
The Canadian tech company is one of the best stocks to buy in Canada as it is trading at a discount relative to its peers, with forward price to earnings coming in at 16.89 and a price to book of just over 3.5.
Analysts are quite bullish, with 17 of the 22 analysts rating it as a buy or strong buy. With the recent drop, the one-year average price target offers double digit upside, and is a buy on the dip candidate.
Mkt Cap: $25.21 Billion
YTD Gains: N/A
Fwd P/E: 16.89
1Yr Price Target: $116.50
19. Opentext (TSX:OTEX)
Open Text (TSX:OTEX) is a software development company that specializes in providing Information Management Software. The company is a leader in an industry that is growing at a rapid pace. Businesses use to think of data services as a luxury, but they are now quickly becoming a necessity.
Just recently, Open Text entered agreements with Google’s cloud division and Mastercard. Its partnership with Google will allow its applications to be available on Google’s cloud-based system, and also to be integrated with popular applications such as Google Sheets and Google Drive.
Its deal with Mastercard is a partnership moving forward to increase the efficiency of the payment and financing sections in the automobile industry.
Open Text has spent over $2.2 billion on acquisitions in the last 3 years and it is the primary driver for its growth. Because the tech industry is spread so thin, an investor will need to keep an eye on the company to make sure it isn’t overpaying for acquisitions because of highly competitive bidding wars.
Recently, it closed on one of its larger acquisitions– the $1.45 billion deal for Carbonite which is expected to be materially accretive to cloud revenues, margins and adjusted EBITDA.
With expectations of 11.40% annual growth over the next five-years and a five-year dividend growth rate of 15%, Open Text is one of the best technology stocks, and one of the best overall stocks to buy in Canada.
Mkt Cap: $14.23 Billion
YTD Gains: -8%
Fwd P/E: N/A
1Yr Price Target: $51.50
18. Pinnacle Renewables (TSX:PL)
Pinnacle Renewables (TSX:PL) has a very unique position in the renewable energy sector. The company provides wood pellets, which are used by thermal power generators to produce renewable power. The company currently has 7 facilities in Western Canada and one production facility in Alabama.
Pinnacle Renewables operates in an industry that is in the very early stages of its life cycle. Renewable energies will become a primary source of energy in the future, and Pinnacle Renewables is already taking advantage with $7.1 billion in project backlogs.
There are some significant risks with the company however, and this could be one of the most volatile stocks on our list of Canadian stocks to buy. The product is in its infancy stages, and as such technological advancements could make it obsolete. For Pinnacle to thrive, it needs the world to grab onto and move towards greener forms of energy, which is showing to be easier said than done.
However, the demand for the company’s pellets is expected to double in the next couple years, and the company has added over $4.8 billion in contracts over the past two years. Analysts are expecting Pinnacle to post over 282% in growth next year, so expectations are lofty.
As with any young growth company, Pinnacle has been a mixed bag in terms of earnings, frequently alternating between exceeding expectations and missing them on an extensive level. Analysts have placed 66% upside on this stock moving forward, and it provides a very lucrative dividend of ~6.67% with a payout ratio in the high 80’s.
All in all, this Canadian stock provides significant upside, but also significant risk.
Mkt Cap: $241 Million
YTD Gains: -27%
Fwd P/E: 15.7
1Yr Price Target: $12.08
17. Shopify (TSX:SHOP)
Shopify (TSX:SHOP) has been one of our top stock to buy in Canada since we started publishing our top stock list. It continues to post outsized returns and has returned over 1,800% since its IPO in 2015.
If not for sky-high valuations, Shopify may have been our number one stock to buy. However, it has run-up to a point where it could cause significant volatility if the company were to come short of expectations.
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 over 75% merchant growth and major brands such as Canadian Tire, GE and Tesla use Shopify’s product.
Analysts say the company will grow at a rate of 58% annually over the next five years, which is an astonishing rate. However, it’s important to keep in mind you are paying a premium for this growth. Shopify is currently trading at over 37 times sales earnings, and 23 times book value.
There is a lot of promise investing in the tech giant, but it may be a rocky road.
Mkt Cap: $65.9 Billion
YTD Gains: N/A
Fwd P/E: N/A
1Yr Price Target: $413
16. Constellation Software (TSX:CSU)
Constellation Software (TSX:CSU) specializes in acquiring, managing, and building vertical market software businesses. The company is by far the largest priced TSX tech stock and one of the most expensive stocks on the TSX as a whole. This ends up turning a lot of new investors away.
Trading at over $1300 a share, it is a tough pill to swallow. Most investors shift towards stocks that they can buy multiples of.
However, the company has been on a tear as of late and has returned 47% to investors over the past year. The company is trading at a premium, 30 times forward earnings and 40 times book value. However, the company’s two-year PEG, even with this latest run up still sits at only 1.52. Analysts are expecting 15% annual earnings growth from the company over the next 5 years, and for the most part they label the stock a hold.
Patient investors may be wise to wait for a dip in price and snatch up some shares (or a single if its all you can afford) of Constellation.
Don’t wait too long, the company’s share price has been deemed ‘expensive’ for the better part of the past five years and it is still hitting new highs on yearly basis.
Mkt Cap: $27.59 Billion
YTD Gains: N/A
Fwd P/E: 30.58
1Yr Price Target: $1545
15. Kirkland Lake (TSX:KL)
Kirkland Lake (TSX:KL) has been nothing short of a star performer. The Canadian mid tier gold mining company posted yet another solid year and its share price gained another 60% in 2019. Of note, if you’re interested in other gold companies, we’ve got a great list of the best Canadian gold stocks.
Most investors tend to stay away from Canadian gold companies, typically due to their volatility and fluctuation production. However, Kirkland has been able to provide solid numbers for some time now. The company is continually looking to reduce costs and improve revenue. And with a surging price of gold, now may be a good time to buy this Canadian mining stock.
Kirkland Lake recently made waves when it made an office to acquire Detour Gold. Detour owns and operates one of the most attractive single-mine asset in North America. The deal is expected to close in early 2020.
Analysts have double-digit upside in their one-year price target of $59.93 per share. Kirkland has consistently beat earnings estimates and has proven to be a best-in-class gold producer.
Mkt Cap: $12.37 Billion
YTD Gains: -23%
Fwd P/E: 16.60
1Yr Price Target: $59.93
14. Goeasy Ltd (TSX:GSY)
Goeasy Ltd (TSX:GSY), a small-cap Canadian stock, is a full-service provider of goods and alternative financial services. It operates in two segments: easyfinancial and easyhome. Although easyhome has been profitable and continues to grow, the company’s real growth prospects are found within its easyfinancial portfolio.
Recently, it made strategic decisions to enter the Quebec market and to enter a new financial lending sector. The company has increased its loan range from $500-$15,000 to loans of $15,000 to $30,000, which is a $18 billion dollar market.
Where Goeasy differs from most financial institutions is its ability to lend to those who may have been shut down by a bank. This is because the company is not forced to follow strict regulations placed on major Canadian financial institutions.
With mortgage lending tightening up, this will surely lead to a bigger customer base. It is one of the fastest growing companies in Canada and was nominated to the inaugural TSX 30.
Goeasy has provided stable and consistent earnings by matching or exceeding analysts expectations on a regular basis. Analysts expect the company to grow by 31% over the next year and the stock is rated a consensus “buy”.
Analysts one-year target estimate actually indicate downside in the alternative lender, but we are bullish on the stock. An investment in GoEasy also comes with a five-year dividend growth streak averaging 29% growth. It remains one of the top Canadian stocks to own in 2020.
Mkt Cap: $781 Million
YTD Gains: -20%
Fwd P/E: 6.31
1Yr Price Target: $77.20
13. Aritzia (TSX:ATZ)
Aritzia (TSX:ATZ) is a women’s only fashion company that designs, develops and sells fashion products. The company currently operates a total of 91 stores in North America, which includes a 14 000 square foot shop in New York City.
Aritzia is confident in its ability to provide double-digit growth numbers, and it points to its e-commerce dedication to achieve that growth. With fashion, there is always the risk that a style will simply “fade” away. That is why it is very important to invest in retail companies like Aritzia and Canada Goose, who have shown the ability to adapt and overcome trending fashions to stay relevant.
Aritzia has been a model company in terms of meeting expectations. It has consistently beat on both the top and bottom-line expectations. Analysts have high hopes for the company and expect it to grow earnings at an average of 15% annually over the next five years. Analysts are unanimous in their coverage of the stock, Aritzia is a “buy”!
If the company can continue to grow online sales and stay ahead of fashion trends, there is no reason to believe Aritzia won’t hit growth targets.
Mkt Cap: $2.1 Billion
YTD Gains: +0.1%
Fwd P/E: 17.97
1Yr Price Target: $26.20
12. Park Lawn Corp (TSX:PLC)
Park Lawn (TSX:PLC) specializes in memorialization, cemetery and funeral industry products and services. Park Lawn is the only Canadian funeral service that is publicly listed, and the company owns more than 140 acres of land and 40 years of available inventory.
What makes Park Lawn so hard to resist is the fact that death is truly something we can’t avoid, and we typically want to see our loved ones laid to rest appropriately, and are willing to spend a little extra money to do so.
Park Lawn has been going at a rapid pace. The company issued its IPO in 2011 and has since returned over 500% to investors. Starting out with only 6 cemeteries and 3 crematoria Park Lawn has expanded to over 150 locations today.
Analysts expect the company will grow earnings by 28% next year, and have placed a one-year target price of $33.86 per share that implies 30.33% upside. Park Lawn has a strong history of meeting or exceeded earnings expectations and it currently pays a 1.71% dividend yield. It will be important to keep an eye on the dividend, as its payout ratio currently sits at over 100%.
Overall, in terms of Canadian stocks to buy, Park Lawn Corp is one of the best.
Mkt Cap: $752.4 Million
YTD Gains: N/A
Fwd P/E: 24.27
1Yr Price Target: $33.86
11. Exchange Income Corp (TSX:EIF)
Exchange Income Corp (TSX:EIF) provides services and equipment to companies in the aerospace industry, and has a wide variety of services. The company provides scheduled, chartered, and emergency medivac services while also providing regional operators with aircraft, engines and other components and parts.
The company relies heavily on acquisitions to drive growth, and at times it makes several a year. Because of its diverse portfolio of services, it should be able to withstand harsh economic climates.
The company generates a significant portion of its revenue from government related contracts. This can be a benefit or a downfall, depending on how you look at it. Governments like to spend, but there is also the chance new political intervention could cause costs to be cut.
The company has a nine-year dividend growth streak, and the five-year dividend growth rate is ~5%. The company currently pays a safe and reliable dividend north of 6 percent which makes it an attractive income stock. Another note, the Canadian company pays dividends on a monthly basis.
If you’re going to invest in the Canadian aerospace company, you may be wise to keep an eye on its dividend.
Mkt Cap: $1.36 Billion
YTD Gains: 13.26%
Fwd P/E: 10.70
1Yr Price Target: $51.75
10. Manulife Financial (TSX:MFC)
Manulife Financial (MFC.TO) is one of Canada’s largest insurance companies. As an insurer, they are well poised to take advantage of the high interest rates here in Canada. The threat of lowering interest rates has left the company trading somewhat sideways over the past year, but there is still a ton to like about the Canadian insurance giant.
The dividend is well covered by operating cash flows, using up only 9%. The company currently yields 5.02%, and analysts expect Manulife to grow around 13% annually over the next 5 years. This has led them to place a one-year price target on the insurance company of $29.29, which equals out to 44.7% upside as of today’s price.
Mkt Cap: $37.8 Billion
YTD Gains: -24.8%
Fwd P/E: 5.93
1Yr Price Target: $29.29
9. Heroux Devtek (TSX:HRX)
Heroux Devtek (TSX:HRX) is a fairly interesting Canadian stock. For one, it operates in the airline industry but not in the way you may think. The company doesn’t deal with passengers, it deals with the automation and landing gear of aircraft.
Although the stock is considered relatively small by Canadian standards with a market cap of just over $580 million, Heroux Devtek is the third largest landing gear company in the world.
The most important aspect of the company is its contracts, particularly those with the United States military.
I think it’s public knowledge that the United States loves to spend money on defense. Case in point, Donald Trump stated the US Military budget in 2019 will be north of $680 billion. Heroux Devtek recently inked a contract to produce landing gear for their C-130H Super Hercules aircraft beginning in 2020.
The company has had a great run, returning 68% over the past year. The stock was recommended to premium members back in February of 2019, and they have reaped the rewards.
Analysts continuously move their one-year price target upwards and as of writing, imply 36% upside. Over the next five-years, the company is expected to post 22% annual earnings growth.
A long-term investment in Heroux Devtek could pay off handily, making it one of the best stocks to buy in Canada today.
Mkt Cap: $580.70 Million
YTD Gains: -19%
Fwd P/E: 18
1Yr Price Target: $21.75
8. Savaria (TSX:SIS)
Savaria (TSX:SIS) is a newcomer on our list of the best Canadian stocks, and for good reason. The company is projected to post impressive growth numbers in an industry that is growing exponentially. Savaria provides a range of mobility related products such as stairlifts, platform lifts and elevators.
It’s no secret the Canadian population is getting older. In fact, by 2030, the Government of Canada estimates those aged 65 years or older will represent 23% of the population. This is nearly 50% higher than today’s numbers.
The company’s stock price has been somewhat weighed down by weak earning reports and share offerings, but don’t let short term disappointments cloud your judgement of a long term investment. Savaria has beat revenue expectations for the last 2 quarters, but earnings have somewhat struggled, missing the mark in 5 straight quarters.
However, the company is relatively cheap, trading at only 17 times forward earnings and a price to book of 2. Its two year PEG sits at around 1, which signals the stock is neither over or under valued, but analysts are fairly bullish on the mobility based company.
The stock is a consensus “buy”, and earnings are expected to grow nearly 20% in the next year. With a 1 year target price of $16.17, Savaria has over 50% upside from today’s prices.
Mkt Cap: $538.97 Million
YTD Gains: -24%
Fwd P/E: 17.80
1Yr Price Target: $16.17
7. Canada Goose (TSX:GOOS)
Canada Goose (TSX:GOOS) is quickly becoming one of Canada’s best stocks to buy, mainly because of its prestigious brand recognition and the fact it has turned its ridiculously expensive parkas into a must have fashion. The more expensive your product, the stronger the brand you need to push it.
What is particularly attractive about the company is that its parkas are quickly becoming a status symbol worldwide, especially in China. The company has recently opened stores in Boston and Tokyo, further expanding its worldwide footprint.
Unfortunately, Canada Goose’s stock has struggled. In 2019, it lost 21% of its value, and it is a trend that has continued in early 2020 with the company losing 34.5%. The good news is that it is now a great opportunity to pick up the stock.
Canada Goose hasn’t missed analyst estimates in both sales and earnings in a single quarter since its IPO, and it simply continues to deliver. It is trading at only 17 times forward earnings and has PEG ratio of 1.17, the lowest in its history.
If the company can increase its online presence, it will have a positive effect on both its sales volume and profit margins. According to Canada Goose, jackets sold online result in 2 to 4 times more operating income. Analysts have placed a one-year target estimate on the company of $60, which indicates nearly 100% upside. We could easily see this going higher if Canada Goose has a solid 2020.
Mkt Cap: $3.27 Billion
YTD Gains: -34.5%
Fwd P/E: 17.04
1Yr Price Target: $60.18
6. Bank of Nova Scotia (TSX:BNS)
The Bank of Nova Scotia (TSX:BNS) is one of Canada’s Big Five banks and the third largest bank by market capitalization. The bank’s inclusion on our list is simply due to the excellent buying opportunity due to its recent under performance.
As history as shown, an investment in the worst performing Big 5 bank has often resulted in returns of 20% or more. And at the time of writing, Scotiabank is Canada’s worst performing bank.
The company provides an excellent dividend which yields over 6% and has a payout ratio of only 51%. The bank has raised dividends for 8 straight years and has a 5 year dividend growth rate of 6%. Although Scotiabanks dividend yield is excellent, the true potential in this stock is its current undervaluation.
The Canadian bank stock is currently trading at only 7.7 times forward earnings, and 1.1 times book. With a 2 year PEG of 2.63, it seems like there is growth priced into this stock already. However, with income stocks you can expect to pay a premium, and expect that premium to be paid forward at more expensive price points.
Analysts have a 1 year target price of $78.90 on the stock, which signals nearly 34% upside. Combine that with its 6% yield, and you have one of the strongest stocks to buy in Canada today. The company is also heavily featured in ETFs that are focused on Canadian banks.
Mkt Cap: $71.60 Billion
YTD Gains: -20%
Fwd P/E: 7.77
1Yr Price Target: $78.90
5. TFI International (TSX:TFII)
TFI International (TSX:TFII) is a trucking and logistics company. The company operates in four segments: Package and Courier, Less-Than-Truckload, Truckload and Logistics. The company has over 400 terminals across North America.
The company has posted blowout earnings and sales numbers and records with every passing quarter.
The company is trading at a deep discount. Trading at only 8.26 times forward earnings, a five-year PEG of 0.53 and a price to book of only 1.94, its easy to see why analysts have placed nearly 50% upside on the Canadian trucking company. If TFI continues to produce at the rate it is, an investment in the company will inevitably pay off.
TFI is a Canadian Dividend Aristocrat, raising dividends for nine straight years. The company has a yield of 2.97% at the time of writing at a five-year dividend growth rate of 10%.
Mkt Cap: $3.18 Billion
YTD Gains: -18%
Fwd P/E: 8.26
1Yr Price Target: $53.83
4. Intact Financial (TSX:IFC)
Intact Financial (TSX:IFC) 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. The company has close to $10 billion in annual direct premiums and an estimated market share of nearly 20%.
The company has achieved double-digit growth over the past five years and is a Canadian Dividend Aristocrat, raising dividends for 15 straight years. The company’s dividend yield is well covered by cash flows, coming in at only 31% of free cash flow.
The company has targeted net operating income growth of 10% annually, and with a forward price to earnings of only 15.30 and a five-year PEG of 1.38, it is reasonably priced . Analysts are not as bullish as we are on the Canadian insurance company with a one-year price target that implies flat growth.
It was the same issue last year, yet Intact delivered 42% growth in 2019. We are of the same opinion we had last year – Intact Financial is one of the best Canadian stocks to own today.
Mkt Cap: $19.80 Billion
YTD Gains: -2%
Fwd P/E: 15.30
1Yr Price Target: $146.92
3. Cascades (TSX:CAS)
Cascades (TSX:CAS) produces, converts and markets packing and tissue products consisting of recycled fibers. The company operates through four segments: Containerboard, Boxboard Europe, Packing Products and Tissue Papers.
As the world moves towards a cleaner, greener approach, it is good to note that Cascade’s products are made up of 80% recycled products and 42% of its energy use is from renewable sources.
It uses 2.7x less energy and 4.0x less water than industry averages, and young investors who are looking for socially responsible companies to invest in may be intrigued by Cascades. Analysts expect the company to grow at a rate of 37% annually over the next five-years, and have a one-year price target of $14.10, which signals just over 20% upside from today’s pricing.
The reason the stock made our best Canadian stocks list is simply because its value. Currently, the stock is trading at only 9.8 times forward earnings and has a PEG of only 0.30. To add to this, the company is trading at only 0.71 times book and 0.23 times sales.
Mkt Cap: $1.06 Billion
YTD Gains: +0.1%
Fwd P/E: 9.80
1Yr Price Target: $14.10
2. TD Bank (TSX:TD)
TD Bank (TSX:TD) is one of the strongest stocks to buy in Canada, mainly because of its Big 5 status. One of the biggest banks in the country, the company has a market cap of over $100 billion and is one of the best paying dividend stocks in the country.
The stock provides international exposure, with 40% of its overall revenues coming from the United States. As a result, TD Bank does not face as heavy of exposure to Canadian interest rates like other Canadian Banks. In fact, the company has benefited from a reduction in corporate tax rates in the US last and will be able to take advantage of a surging US Economy.
Because TD has one of the best dividends in the country, you often pay a premium for the stock.
The key thing to note is the stock is only trading at 8.37 times forward earnings and a price to book of 1.28, one of the lowest of its peers. As of writing, it is trading at a double-digit discount to historical averages, only the third time in the past decade it has been this cheap.
TD Bank offers a starting dividend yield of 4.70% and has one of the lowest payout ratios in the industry (44%). Combined with an industry-leading dividend growth rate (~10%) and you have one of the top Canadian stocks to buy for both growth and income.
Mkt Cap: $106.71 Billion
YTD Gains: N/A
Fwd P/E: 8.37
1Yr Price Target: $80.18
1. Equitable Group (TSX:EQB)
Equitable Group (TSX:EQB) is Canadian alternative lender that provides loans and mortgage solutions. What we like the most about Equitable Bank is that they are truly a triple threat in terms of Canadian stocks. They provide excellent growth, a solid dividend, and amazing value.
People are flocking to alternative lenders, especially those that offer mortgage solutions, because the Canadian stress test that the major financial institutions must follow is reducing purchaser’s buying power by up to $70,000.
The company is currently trading at a deep discount, with a forward price to earnings of only 5.36, a price to book of 0.92 and a two-year PEG of only 0.28. There is a substantial amount of growth not priced into this stock, and analysts expect the company to grow at a rate of 25% annually over the next 5 years.
Equitable currently has a dividend yield of 1.69%, a five-year dividend growth rate of 14% and a nine-year dividend growth streak. In fact, the company has raised its dividend for six straight quarters. That’s right, quarters, not years!
If you believe in the alternative lending industry and can look past the negative stigmas associated with it, then Equitable Group and our next stock GoEasy Ltd are some of the best Canadian stocks to own in a growing industry.
Mkt Cap: $1.279 Billion
YTD Gains: -30%
Fwd P/E: 5.36
1Yr Price Target: $120.80