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 35 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 50% on my TFSA in 2018. In fact, some of these stocks were spotted and relayed to premium members before gaining 150%. If you’re interested, check out Stocktrades Premium here. If not, enjoy this list of the 35 best Canadian stocks to buy today.
Feel free to drop your top stock picks in the comments below. Who knows, maybe they will get added next update!
**Writer Daniel Kent is long SU, ENB, CTC-A, SHOP, TD, SIS, TFII, PKI, GOOS, PLC
Canadian Stocks To Buy For 2019:
35. 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, with 11 being made over the last 10 years. 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 8 year dividend streak, and its 5 year dividend growth rate is 5%. The company currently pays a dividend of 5.75%, but the health of the dividend is certainly in question. As of writing, Exchange Income Corp is paying over 175% of its free cash flows towards the dividend, and it may be unsustainable. If you’re going to invest in the Canadian aerospace company, you may be wise to keep an eye on its dividend.
34. 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 13, a price to book of 0.60 and a 5 year PEG ratio of 1.04, there isn’t much growth priced into this stock as of right now. We can attribute most of this to the weakness in the Canadian oil and gas sector. Analysts are bullish on the company, expecting annual revenue growth of 17% over the next 5 years. The company’s dividend is healthy, yielding 2.74% at the time of writing with a payout ratio of only 33%. Add to this nearly 51% upside at today’s price levels, and you have one of the best Canadian stocks to buy in the oil and gas sector.
33. Enerflex (TSX:EFX)
Enerflex (TSX:EFX) is a supplier of natural gas, oil and gas processing, refrigeration systems and electric power equipment. The company provides unique exposure to the oil and gas industry as it actually doesn’t mine or process the commodity itself. It instead provides oil and gas companies with the equipment to do so. Enerflex really wasn’t on our radar at all, until its recent fiscal 2018 closed out with some excellent numbers. Revenue was up 9.7% year over year, gross margin 7.5% and the company’s USA bookings are up over 112% from the previous year.
The stocks price has taken somewhat of a nosedive as of late, mostly due to a combination of a weak first quarter report and the oil and gas bear market. As Enerflex is a supplier of equipment to oil and gas companies, it is directly effected by the price of oil and the production numbers of the companies it supplies. However, the recent price dip has left investors with a great buying opportunity.
Enerflex is trading at only 11.50 times earnings and 1.17 times book. The stock is rated a consensus “buy” from analysts and they have labelled the stock as having nearly 38% upside potential. Add to this a 2.50% dividend yield, one that is well covered by free cash flows (28% of FCF) and you have a great opportunity to make some outsized returns once the oil and gas sector rebounds.
32. Badger Daylighting (TSX:BAD)
Badger Daylighting (TSX:BAD) is a newcomer to our best Canadian stocks to buy list, and it 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. Its primary growth strategy is down south, where it expects to double its U.S. operations over a period of 3 to 5 years. In order to do this, the company must grow its U.S. sales at a rate of of 32% and so far it is keeping up with that pace.
The company pays a modest 1.16% dividend, and its payout ratio of only 30% signals that the dividend is healthy. The company has raised dividends for 3 straight years and has a 5 year dividend growth rate of 7%. In terms of growth, analysts expect Badger to grow by nearly 37% over the next year, and have labelled the company with 9.5% 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.
31. 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.
Because Suncor has an integrated business model, the company is able to send its oil production to its own refineries in the US, which are 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 12 times forward earnings, 1.5 times book and has a 2 year PEG of only 0.87. Suncor offers one of the best dividends in the country, with a yield of over 4%, and takes up only 54% of free cash flows.
Suncor has 33% 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.
30. 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 stagnant 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.
For one, it is a Canadian Dividend Aristocrat. Manulife has raised dividends for over 5 straight years, and has a 5 year dividend growth rate of over 11 percent. Its dividend is well covered by free cash flows, using up only 9%. The company currently yields 4.16%, and analysts expect Manulife to grow around 11% annually over the next 5 years. This has led them to place a 1 year price target on the insurance company of $29.18, which equals out to 21% upside as of today’s price. Manulife may face some volatility for the remainder of 2019 due to the threat of falling interest rates. So, it could be beneficial to wait until a dip in price.
29. 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, which ends up turning a lot of new investors away. Trading at over $1246 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 32% to investors in 2019. The company is trading at a premium, 32 times forward earnings and 52 times book value. However, the company’s 2 year PEG, even with this latest run up still sits at only 1.33. Analysts are expecting 13.75% annual 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.
28. Alimentation Couche-Tard (TSX:ATD.B)
Alimentation Couche-Tard (TSX:ATD-B) is the largest convenience store operator in Canada and the 2nd 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 12,081 stores (7,863 in North America, 2,708 in Europe and 1,510 internationally.)
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. Over the last year, the stock has increased over 30% in value, primarily driven by solid earning reports and store growth.
Analysts are signalling downside of about 10% on the company, and they may be right. The stock is trading at 24 times forward earnings and has a 2 year PEG of nearly 6. There is a lot of growth priced into this stock, and sometime in the future I think we can expect a dip in the stocks price. However, when this happens investors would be wise to grab some shares in this high-performing Canadian stock before it rebounds.
27. 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 5% and has a payout ratio of only 50%. 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 9 times forward earnings, and 1.34 times book. With a 2 year PEG of 1.52, 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 $78.15 on the stock, which signals nearly 13% upside. Combine that with its 5% yield, and you have one of the strongest stocks to buy in Canada today.
26. Aurora Cannabis (TSX:ACB)
Aurora Cannabis (TSX:ACB) is one of the fatest growing Canadian cannabis companies in the world, and is included on our list of the best Canadian stocks to buy for a good reason. The company has made the two largest acquisitions in the history of the industry in MedReleaf and Cannimed, and as a result they have the largest funded production capacity in the industry at over 750,000 kgs.
Aurora Cannabis, much like our next stock Canopy Growth, is extremely expensive. The company is trading at over 125 times forward earnings and 50 times sales. However, analysts expect Aurora to grow by over 79% next year, and in terms of revenue the company has saw an increase of over 300% year over year. Aurora has frustrated a lot of investors with consistent share offerings, and as a result the stock has taken a hit.
Aurora has recently acquired a contract to supply medical cannabis to Italy, and continues to move forward with international expansion.
25. Canopy Growth Corporation (TSX:WEED)
Canopy Growth (TSX:WEED) is one of the most recognizable and largest Canadian cannabis stocks, and is one of the most pivotal stocks on this list. When this list of the best Canadian stocks to buy was created, Canopy was our number one stock at $12. It has rewarded shareholders with over 400% returns since then.
Canopy is growing at an exponential pace. Revenue in March of 2018 was $22.81 million. One year later, Canopy has posted quarterly revenu of over $94 million. Its a significant increase, but the company is consistently missing earnings by large numbers due to expansion efforts. Canopy is making significant investments to enter the United States market prior to cannabis even being legal. An investment in Canopy may not pay off right away, but if you are willing to face the significant volatility that is sure to come from Canadian cannabis companies, I’d consider Canopy best in class.
Analysts are expecting growth of 66% from the company over the next year, and have set a 1 year price target of $71.08, indicating 52% upside. This upside comes at a cost however, as Canopy is currently trading at 148 times forward earnings and 65 times sales.
24. Whitecap Resources (TSX:WCP)
Whitecap Resources (TSX:WCP) is a domestic oil and gas producer. The company has assets primarily across Western Canada in areas of British Columbia, Alberta and Saskatchewan. Whitecap has an extremely attractive dividend yield right now at 8%, and this is primarily due to the fact its price has been driven down substantially due to the oil and gas industry struggling. Although the company’s payout ratio seems high at 803%, Whitecaps CEO has come out and said they have no plans to cut the dividend. In fact, it plans on increasing it moving forward.
Analysts are extremely bullish on the Canadian stock, expecting growth of over 120% in the next year and have placed a 1 year target price on the company of $8.10, which signals near 100% upside. For those who are willing to take a little bit of a risk, investing in junior oil and gas companies could reap significant rewards if you are patient.
23. 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 in particular we really like about Canadian Natural is its ability provide consistent free cash flows. Just in the first 3 months of 2018, the company had adjusted funds flow of over $7.8 billion, equating to almost $6.50 a share. 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 13 times forward earnings and 2 times book, analysts have placed a 1 year target estimate of $47.60 on the company, which indicates almost 50% upside from today’s pricing. Along with that, investors can reward themselves with a 4.32% dividend yield, one that is easily covered by cash flows (56% of free cash flow.) Along with this is a 5 year dividend growth rate of over 18% and an 18 year dividend growth streak.
22. Boyd Income Fund (TSX:BYD.UN)
Boyd Income Fund (TSX:BYD.UN) is an open ended mutual fund trust that operates in the automotive industry, particularly automotive and glass repair. The company holds a majority interest in the Boyd Group Inc, which operates in five Canadian provinces and over 25 states.
The stock has gone up nearly 50% in 2019 primarily due to an excellent end of its fiscal 2018 and start of fiscal 2019. The company has beat sales and earnings estimates for 2 straight quarters, a key highlight being its 20% beat on earnings in Q1 2019. 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 18% over the next year, right in line with its 20% growth from the previous 5 years, and analysts have given the company 10.5% upside with a 1 year price target of $183.67.
21. 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. However, late 2018 and the early part of 2019 haven’t been very good for the discount retailer. The company has missed on earnings estimates for 4 straight quarters, and revenue has started to flatline. As such, the stocks price plummeted in the final quarter of 2018.
The good news for prospective investors is Dollarama is now at a price that makes an investment easier to swallow. The company is expected to grow by double digits in both sales and revenue over the next 5 years, and is trading at a reasonable 22 times earnings and 4 times book value. Investors looking to buy into Dollarama may be wise to wait for a bit of a dip, as the stock has been on quite a surge in 2019.
20. 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 over $26 billion in projects on the table and another $48 billion in development.
Enbridge’s stock price hasn’t fared well this year due to its high amount of debt that it has accumulated to fund expansion. However, once these expansion projects enter service, and as the company continues to deleverage its position by selling assets it should prosper. Enbridge is typically held by investors looking to collect a handsome dividend, and right now the company is yielding 6.26%. To go along with its excellent dividend, analysts have placed a 1 year target estimate on the company of $54, which equates to 14.2% upside as of today’s price. The company has a dividend growth streak of 23 years, and a 5 year dividend growth rate of over 16%.
The stock is extremely popular in Canadian ETFs, and is widely regarded as one of the best Canadian stocks to own for income.
19. Kirkland Lake (TSX:KL)
Kirkland Lake (TSX:KL) is another newcomer to our list of the best Canadian stocks to buy primarily because of its excellent fiscal 2018 numbers. The Canadian mid tier gold mining company posted solid year over year numbers, and as a resulted its price skyrocketed. Keep in mind, 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 currently trades at a forward price to earnings of 24.03 and has a 2 year PEG of 1.43. As of right now, there is quite a bit of growth already priced in to this stock. Analysts have near 50% downside attributed in their 1 year target estimate of $40, so it may be wise to wait until a price dip to grab Kirkland. The stock dropped quite a bit on our list of the best Canadian stocks to buy simply because its price is getting a little out of control.
Kirkland has beat earnings expectations for the last 5 quarters, and this is a Canadian stock you may want to add to your watch list.
18. 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 aquisitions 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 1 year target price of $174.60, which works out to 21% upside on the retail giant. Combine that with a 2.67% dividend yield and a 5 year dividend growth rate of over 20% and Canadian Tire is a Canadian stock you need to be looking at.
17. 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 5 years, and have a 1 year price target of $12.71, which signals just over 6% 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 12 times forward earnings and has a 2 year PEG of only 0.30. To add to this, the company is trading at only 0.75 times book and 0.23 times sales.
The discount in price is because of a decision in February to stop the renewal of two of its facilities in Ontario. However, we don’t expect these closures to have a long term effect on Cascades.
16. Opentext (TSX:OTEX)
Opentext (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, Opentext 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.
Opentext 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. Opentext has beat earnings expectations for the last 4 quarters, and the stock has returned nearly 28% to investors in 2019.
With expectations of 11.40% annual growth over the next 5 years and a 5 year dividend growth rate of over 21%, Opentext is one of the best technology stocks, and one of the best overall stocks to buy in Canada.
15. Equitable Group (TSX:EQB)
Equitable Group (TSX:EQB) is Canadian alternative lender that provides loans and, unlike our next stock on this list GoEasy Ltd, 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 5.84, a price to book of 1.00 and a 2 year PEG of only 0.49. 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 1.63%, a 5 year dividend growth rate of 12% and a 8 year dividend growth streak.
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.
14. Goeasy Ltd (TSX:GSY)
Goeasy Ltd (TSX:GSY) 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. Over the past year it has 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. The company plans to open anywhere from 20-40 locations by the end of 2020 and wants to increase its loan portfolio to over $1.3 billion in the next year, an increase of over 35%.
Goeasy has provided stable, consistent earnings and has matched or exceeded analyst expectations in each of the last 5 quarters. Analysts expect the company to grow by 26.50% 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 5 year dividend growth streak of over 21% and a yield of 2.27%, making it one of the top Canadian stocks to own in 2019.
13. 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 alreadytaking advantage of this, as it has improved its backlog by over 80% in the last year.
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. In order 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 $2 billion in contracts. Analysts are expecting Pinnacle to post over 285% 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 over 50% upside on this stock moving forward, and it provides a very lucrative dividend of over 6% with a payout ratio in the high 80’s. All in all, this Canadian stock provides significant upside, but also significant risk.
12. Shopify (TSX:SHOP)
Shopify (TSX:SHOP) has been our consensus number one stock to buy in Canada for a couple years now. The stock frequently hovered around $160-$215 intervals and it seemed like a never ending cycle of pricepoints. However in 2019 the stock has broken out in a big way, earning nearly 150%. As a result, Shopify has dropped from number 1 to number 10 on our list of the best Canadian stocks to buy, simply because the run up 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. The stock has returned over 1000% to investors since its 2015 IPO, and it continues to defy expectations.
Analysts say the company will grow at a rate of 62.50% annually over the next 5 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 300 times earnings, and 16 times book value. There is a lot of promise investing in the tech giant, but it may be a rocky road.
11. Aritzia (TSX:ATZ)
Aritzia (TSX:ATZ) is a womens only fashion company that designs, develops and sells fashion products. The company currently operates a total of 75 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 beat both top and bottom line expectations for 5 straight quarters, and in its Q1 2019 report, the company increased gross profits by 26.7% and EBITDA by 24.8% year over year. Analysts have high hopes for the company and expect it to grow at a 18% pace annually over the next 5 years. With a 1 year price target of $22.50, Aritzia has over 35.5% upside from today’s pricing.
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.
10. 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 $700 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 went on a significant run as of late, up 42% since February which equates to a CAGR of over 115%. The stock was recommended to premium members back in February, and they reaped the rewards. Heroux Devtek has been a mixed bag in terms of sales and earnings, beating on top and bottom lines for the last two quarters, but missing the two previous. Analysts figure there isn’t much upside left at today’s price levels, indicating just 3 percent upside, but they also expect the company to post 22% growth annually over the next 5 years. A long term investment in Heroux Devtek could pay off handily, making it one of the best stocks to buy in Canada today.
9. 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 $140 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 year, and will be able to take advantage of a surging US Economy.
The stock is trading at a 2 year PEG of 1.33, which you would think would be a detriment. However, 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 10.41 times forward earnings and a price to book of 1.76, one of the lowest of its peers. TD has met the mark or exceeded expectations in both earnings and sales estimates in 4 of the last 5 quarters.
With a 1 year target estimate of $83.83, analysts have placed upside of 9% on the Canadian financial giant. Add to this a dividend yield of 3.86%, one that is well covered with a payout ratio of only 44% and you have one of the top Canadian stocks to buy for both growth and income. An even more impressive metric, TD Bank is growing its dividend at a 10% pace over the last 10 years, and has increased dividends for 8 straight.
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 20 times forward earnings and a price to book of 2.90. 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 $17.11, Savaria has over 37% upside from today’s prices.
7. TFI International (TSX:TFII)
TFI International (TSX:TFII) is a trucking and logistics company. The company operates in 4 segments: Package and Courier, Less-Than-Truckload, Truckload and Logistics. The company has over 400 terminals across North America. What makes TFI so enticing is the fact that even though it is putting up record numbers in terms of earnings and sales, its price keeps falling. Why? The constant threat of tariffs. The company has posted blowout earnings and sales numbers over the last 5 quarters, beating earnings estimates by an average of 27%.
What you’re left with is a company that is trading at a deep discount. Trading at only 9 times forward earnings, a 5 year PEG of 0.53 and a price to book of only 2, its easy to see why analysts have placed nearly 40% 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 8 straight years. The company has a yield of 2.55% at the time of writing at a 5 year dividend growth rate of 10%.
6. 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 6 straight years. With a yield of 2.73% and a payout ratio of only 61% its dividend is healthy and growing.
Analysts are bullish on the fuel distributor and are expecting 20% growth over the next year. with a 1 year target estimate of $48.95, they have placed 11.3% upside on the company moving forward. Couple that with a growing, stable dividend and you have one of the best Canadian stocks to buy today.
5. CGI Group (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 recently built its backlog by over $890 million, bringing it to a total of $22.9 billion. With a book to bill ratio of 106.1%, there is more demand for CGI’s services than there is supply. CGI has grown revenue by 9.5% 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 company has met or exceeded earnings expectations in each of the last 5 quarters, and has only missed on sales estimates once by a mere 1.48%.
The Canadian tech company is one of the best stocks to buy in Canada simply because it is trading at a discount relative to its peers, with forward price to earnings coming in at 19.69 and a price to book of just under 4. Again, analysts aren’t as bullish as we are on CGI, indicating almost no upside from its current price, but there is reasons to be very positive about the company moving forward.
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 5 years and is a Canadian dividend aristocrat, raising dividends for 14 straight years. The company’s dividend yield is well covered by cash flows, coming in at 37% of free cash flows, and it has a 14 year dividend growth streak.
The company has targeted net operating income growth of 10% annually, and with a forward price to earnings of only 15.5 and a 2 year PEG of 0.89, there is some growth not priced into this stock. Analysts are not as bullish as we are on the Canadian insurance company, indicating a 1 year price target of $123.64, which signals about 1.5% downside at the time of writing. However, with a 2.41% dividend, one that is considered very healthy, and the level of growth it has achieved thus far, we feel Intact Financial is one of the best Canadian stocks to own today.
Canada’s Top 3 Stocks: Grab Them Instantly
3. 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.
Canada Goose’s stock recently took an absolute beating on revised guidances. As analysts expected 25-30% growth, Canada Goose tempered expectations and said 20-25% was more along the lines of achievable. The company’s stock took a nosedive, losing almost 30% on a single day of trading, but it has since recovered almost half of that. 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. 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 1 year target estimate on the company of $69.66, which indicates over 22% upside. We could easily see this going higher if Canada Goose has a solid 2019.
2. Air Canada (TSX:AC)
Air Canada (TSX:AC) is one of Canada’s most popular stocks, and Canada’s biggest airline. The company recently posted record operating revenues of $4.453 billion in a single quarter and increased passenger revenues by 9.4% on a year over year basis. 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 either hit the mark or exceeded on revenue estimates in 5 straight quarters. The company has also exceeded earnings expectations in 4 of the last 5, its only miss was coming in 3% lower than expected in September of 2018. If Air Canada can continue to exceed analyst expectations and drive growth, it will remain one of the best stocks to buy in Canada. Analysts have a 1 year target price of $46.13 on the company, which indicates only 4% upside, but the stock is currently up over 76% year to date, which is a strong indication of investor confidence. Compared to its counterpart Westjet (TSX:WJA), we feel Air Canada is the better investment for the future.
1. 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 400% 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 over 24% next year, and have placed a 1 year target price on the stock that indicates 15% upside. Park Lawn has met or exceeded earnings expectations in 4 of the last 5 quarters, and it currently pays a 1.58% 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.