Stocks To Watch For 2018 – 7 Stocks You Need To Keep An Eye On

Stocks To Watch Today

The first quarter of the year is nearing an end and the stock market has produced mixed results. At the start of the year, strategists expected the Canadian market to underperform the U.S. market and thus far they are proving to be correct. The S&P/TSX Composite Index is down 3% year-to-date, while the U.S. market is up about 3%. This has created a lot of stocks you should be keeping an eye on, which is why we have decided to roll out a set of stocks to watch after Q1 of 2018.

Despite being in the red, there are several TSX stocks that have performed nicely for investors. For example, the tech sector has been performing particularly well with Shopify and CGI Group both hitting 52-week highs and the TSX Information Technology Index returning approximately 16% year to date. Secondly, Marijuana stocks are a very popular avenue to head down right now and the jury is still out on their ability to hold strong and be more than pure speculation. Rising interest rates have let to continued weakness in pipelines and utilities while banks have been relatively flat.

The following is a list of stocks to watch for Canadian and other investors around the world. Some have underperformed and are poised for outsized returns while others have been firing on all cylinders. We take a short-term view (six months) and provide investors with some key factors that may impact the company’s share price over this time-frame.

These are not recommendations to buy but can be the starting point of your own due diligence. Speaking of which, we have something exciting to share with investors.

 

We’re giving you the stocks to watch, but it shouldn’t end there.

Have you ever asked yourself the following questions: What stock should I buy? What’s a good deal? Our newsletter subscribers will be privy to a 5 part, step-by-step guide on how to analyze stocks. Stocktrades.ca aims to provide a simple how-to guide and equip a means for any investor, new or seasoned, to do their own “DD”, or due diligence, on any stock they wish to purchase.

These “stocks to watch” type lists are only supposed to be a starting point for an investor. From there, they continue on with their own due diligence to determine a companies value. Our first guide is focused on growth stocks, and investors can use several of the companies on the list below to test their analytical skills! This 5 part series of emails will be released in April for those of you that are already signed up.

So as we mentioned, here are some stocks that it might be worth having some eyes on over the coming 6 months.

 

Stocktrades top 7 stocks to watch in Canada right now!

 

1.Shopify

Stocks To Watch in 2018 - Shopify

Price As Of March 27th 2018: $177.01
Ticker: SHOP.TO
Sector: Technology
Industry: Software & Programming
P/E: N/A
EPS: $-.42
Market Cap: 20.213 Billion
Dividend Yield: N/A
Click here to see their chart and opinions

It’s hard to not include possible one of the best stocks on the TSX right now in terms of growth on a stocks to watch list. Shopify is a Canadian tech darling and is best classified as a cloud-based, multi-channel commerce platform. The company’s share price has risen almost 40% since we last updated our Top Dividend Growth stocks for 2018. Shopify tops our stocks to watch list as we continue to be impressed by its growth prospects.

In February, the company announced fourth quarter and year-end results blowing out analysts’ estimates. As far as 2017 goes, revenue grew 73% over and above 2016. In 2018, the company expects revenues to grow by approximately 45% based on its mid-range guidance. Is declining growth a reason for concern? Not at the moment. The company is a secular growth stock and has tapped only 609,000 of its 50,000,000+ merchant target market. The company has made significant announcements in 2018 with Nike, Snapchat, and the Ontario Government for the sale of recreational Cannabis. The sky is the limit for this well-run company.

 

2. Versa Bank

Stocks To Watch in 2018 - Versa Bank

Price As Of March 27th 2018: $7.33
Ticker: VB.TO
Sector: Financial
Industry: Money Center Banks
P/E: 17.30
EPS: $0.44
Market Cap: 162.229 Million
Dividend Yield: 0.56%
Click here to see their chart and opinions

VersaBank, formerly Pacific & Western Bank of Canada, is a little known Canadian bank that is second on our stocks to watch list. It is Canada’s first digital Schedule 1 chartered bank that operates using an electronic branchless model. The company grew revenues by 13% in 2017 and recently introduced its first ever dividend on its common shares. There are two catalysts that are poised to propel the stock further in the coming months.

First, the company is in the process of applying for an Advanced Internal Rating-Based (“AIRB”) approach to risk capitalization that would ease capital ratio requirements and boost returns. In effect, this will allow them to return more capital to shareholders, which will propel the dividend higher. Secondly, the company announced in early February, a new strategic initiative called VersaVault. It is the World’s first blockchain-based safety deposit box and its uses are numerous. Details will begin to emerge as the product is expected to launch in June, 2018.

 

3. Enbridge

Stocks To Watch 2018 - Enbridge

Price As Of March 27th 2018: $39.42
Ticker: ENB.TO
Sector: Oil and Gas Pipelines
Industry: Basic Materials
P/E: 25.02
EPS: $1.65
Market Cap: $69.97 Billion
Dividend Yield: 6.54%
Click here to see their chart and opinions

Enbridge is a bear favorite over the past year. On the back of its Spectra Energy acquisition, it has lost almost 25% of its value. Although the acquisition is expected to add materially to cash flows and support 10% dividend growth through 2020, the main concern is the company’s current leverage. Likewise, there is uncertainty around new master limited partnership (MLP) policy changes south of the border.

The fears surrounding the changes to MLP policy are overblown and the company has indicated that it will not have any material impact on earnings. Likewise, the company is currently pacing ahead with respect to the synergies provided by the Spectra Energy acquisition. It has a targeted Debt/EBITDA ratio below 4.0 in 2018. The continued synergies, improved cash flows, and debt reductions should allow the company to bounce off its near 52-week lows. It continues to rank on our Top Dividend Stocks for 2018 list.

 

4. Magna International

Stocks to watch 2018 - Magna International

Price As Of March 27th 2018: $71.95
Ticker: MG.TO
Sector: Consumer Cyclical
Industry: Auto & Truck Parts
P/E: 12.38
EPS: $5.90
Market Cap: $26.184 Billion
Dividend Yield: 2.29%
Click here to see their chart and opinions

Magna is a global automotive supplier who has so far bucked the cyclical downtrend of the auto sector. The company recently topped earnings estimates on the back of higher European sales in Europe and the launch of new cars from BMW and Jaguar. The company expects sales to outpace vehicle production through 2020 thanks to its diversification and new product launches.

Perhaps most exciting is its recent partnership with Lyft. Magna made a $200 million investment in the company and it will supply Lyft with high-tech kits to turn vehicles into self-driving cars. Although it will have no material impact over the short term as it develops the technology, long-term it has the potential to be a significant catalyst for the company. Investors should also watch for the company to potentially announce some acquisitions. The company acknowledged on its most recent earnings call that it is well positioned to make a large acquisition where it makes sense.

 

 

5. CN Rail

Canadian Stocks To Watch CN Rail

Price As Of March 27th 2018: $93.06
Ticker: CNR.TO
Sector: Services
Industry: Railroad
P/E: 13.29
EPS: $7.24
Market Cap: $71.292 Billion
Dividend Yield: 1.89%
Click here to see their charts and opinions

CN Rail is another staple on our Top Dividend Stocks for 2018 list. This rail company has a network of approximately 20,000 route miles of track spanning Canada and mid-America. The company’s share price has come under pressure recently as the company issued below-consensus guidance for 2018, and in early March its CEO resigned. All in all, this has presented a great opportunity for investors to get into this high-quality stock.

The first thing investors should be on the watch for is who the company appoints as their new CEO. Depending on the successor, it can significantly impact the price movement of the stock over the short term, which is why it is one of our top stocks to watch in 2018. The other catalyst to watch is the spread of Western Canadian Select and the benchmark WTI crude prices. The lack of new pipeline capacity is causing a greater spread that is anticipated to once again fuel crude shipment by rail. In October 2017, oil by rail exports increased by about a third over 2016.

6. Saputo Inc.

Price As Of March 27th 2018: $40.90
Ticker: SAP.TO
Sector: Consumer Goods
Industry: Food-Major Diversified
P/E: 18.18
EPS: $2.27
Market Cap: $15.96 Billion
Dividend Yield: 1.55%
Click here to see their charts and opinions

Saputo is Canada’s largest producer of dairy products including cheese, fluid milk, extended shelf-life milk and cream products, cultured products and dairy ingredients. The company has a growth through acquisition strategy and has acquired 27 companies since 1997. Its growth has slowed over the past couple years, but it’s about to pick up again.

Why are they on our list? In mid-December, the company closed its all-cash acquisition of Betin Inc. which operates under the Montchevre brand. The acquisition is expected to add approximately $150 million in revenues to the company’s top line which will be reflected in its next quarterly earnings. Likewise, the company is expected to close its $1.3 billion acquisition of Australia’s Murray Goulburn over the next few months. The acquisition will add an additional $2.5 billion to the company’s revenues and is expected to provide about $78 million in cost synergies.

7. Cenovus

Canadian stocks to watch Cenovus

Price As Of March 27th 2018: $10.65
Ticker: CVE.TO
Sector: Basic Materials
Industry: Oil & Gas Drilling & Exploration
P/E: 3.63
EPS: $3.05
Market Cap: $13.603 Billion
Dividend Yield: 1.89%
Click here to see their charts and opinions

Cenovus is in the business of developing, producing, and marketing crude oil, natural gas liquids, and natural gas. Recently, Cenovus’s share price has been significantly beaten up since announcing its transformative acquisition of ConocoPhillips’ oil sands stake. The $17.7 billion acquisition was not looked upon kindly by shareholders as it led to Cenovus issuing shares and taking on a great deal of debt. Year-to-date its share price has lost almost 10% and is trading at a significant discount to its book value. Regardless of its current valuation, all eyes continue to be focused on its ability to deleverage.

Why are we including them on our stocks to watch? The company has a new CEO at the helm and he recently indicated that the synergies from the acquisition will exceed the $1 billion initially promised. The company is also looking for buyers of its Deep Basin assets. Investors should pay attention to any news on such sales over the next few months. Providing they receive decent value, the company’s share price should react positively to any asset sale announcements. However, if the company fails to deliver, its share price will continue to remain pressured.

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