What’s up guys, it’s wiz.
Welcome back to the channel. If you are new, I am a Canadian investor. I cover a whole lot of information about investing in Canada and do research into our Canadian market. I dive into growth investing, dividend investing and Canadian small caps / penny stocks. Today, we will be talking about some of the top Canadian companies for June. Always do your own due diligence before buying into any of these companies. For new investors, you need to join Wealthsimple Trade if you are looking to start investing and live in Canada. If you use my link in the description to join Wealthsimple, you get 2 free stocks worth up to 4500$ so do not miss out.
Let’s start off with Morguard North American Residential REIT (ticker symbol MRG.UN). This real estate investment trust owns a portfolio of multi-residential properties in Canada and the U.S., including roughly 13,500 suites, 40% of which are located in Canada. It offers a one-two punch of growth and defence, making it perfect for the current market environment. In addition to its exceptional business operations and long-term growth potential, Morguard also trades ultra-cheap: Thanks to the recent, broad selloff in stocks, Morguard is now trading at a forward price-to-adjusted-funds-from-operations ratio of just 16 times. Or for another measure, it also trades at just 0.6 times its estimated net asset value.
Next is Cineplex (ticker symbol CGX). Cineplex is expanding and is currently much more than just movies. Over the last few years, the company has ventured into related industries, such as the lucrative gaming space. First, the stock has been hit hard over the past two years and I believe it’s now trading in value territory. What’s more, its business is on the upswing as pandemic restrictions have mostly been lifted. So we’re looking at a booming business that’s seeing strong demand. In its latest quarter, Cineplex reported a 500% increase in revenue versus last year (which admittedly was affected by the pandemic) and significantly improved free cash flows.
Next is goeasy (ticker symbol GSY). Goeasy offers leasing and lending services tailored to Canadian consumers who have less-than-great credit. Shares of goeasy are down about 37% this year alone, and I see this as an opportunity for buying. The financial services company has consistently delivered double-digit earnings growth for more than a decade. Moreover, the ongoing momentum in its business, led by strength in loan creations, increase in loan ticket size, and strong credit and payments volumes, suggests that goeasy’s bottom line could continue to grow rapidly. The company’s focus on new product launches, an increasing mix of secured loans, and omnichannel offerings also adds well for growth. Thanks to goeasy’s strong earnings base, its dividends have a CAGR of 34.5% over eight years — and it’s well-positioned to enhance shareholders’ value through higher dividend payments in the future.
Next is Canadian Western Bank (ticker symbol CWB). Canadian Western Bank is a regional bank focused on western Canada, with about 33% of its loans in British Columbia and 31% in Alberta. It has also expanded into Ontario. The shares dropped about 9% after the bank reported earnings, making them an attractive buy. Like most of its larger Canadian bank peers, CWB recently increased its quarterly dividend. Because of its relatively high exposure to loans made in resource-rich Alberta, Canadian Western Bank will experience greater volatility than its bigger peers. Long-term investors who have a three- to five-year investment horizon could see price gains of about 85% from recent prices — and CWB pays a competitive yield of about 4.1% while you wait.
Next is Aritzia (ticker symbol ATZ). Aritzia sells “everyday luxury” clothing (mainly for women) across 108 boutiques in Canada and the United States. The recent market correction has created an enticing opportunity to buy cheap shares in Aritzia. During the pandemic, the company quickly gained traction both online and in the United States — a retail market more than 10 times bigger than Canada’s. Yet the company only has 41 stores in the States, so Aritzia has a huge chance to open stores in new markets there. The company just produced incredible quarterly results: net revenue and net income grew 66% and 113%, respectively. Although Aritzia expects its earnings growth to moderate to the 20% range this year, it has a solid history of beating its outlook. Aritzia has high insider ownership, an excellent balance sheet, and a long, profitable growth runway.
Next is Lightspeed Commerce (ticker symbol LSPD). Its cloud-based omnichannel commerce platform helps merchants become more efficient. Shares of the Montréal company dropped 76% from November 2021 to April 2022, mainly due to a tech sector-wide crash, but rose nearly 20% in May after Lightspeed’s latest results boosted investors’ confidence. Solid growth in its transaction-based revenue drove total revenue up by 78% year-over-year — exceeding estimates. Consistently rising demand for its commerce platform is likely to help Lightspeed post strong topline growth in the coming quarters as well. Even though LSPD stock has climbed by more than 30% since earnings, remember that the rise could just be the beginning of a big, long-term recovery — it still trades with 33% year-to-date losses.
Next is Topicus.com (ticker symbol TOI). Topicus is a software giant with a growth-via-acquisition strategy in Europe. Higher interest rates and market stress mean tech stocks are losing value these days. Publicly traded companies have lost billions, but the pain is also spreading to private tech companies. This dip in valuations is good news for Topicus whose growth strategy depends on its ability to consolidate Europe’s fragmented software industry. Lower valuations and less hype in the sector makes its strategy cheaper to execute. The management team has already ramped up its efforts by deploying $18 million in the first quarter of 2022. The results of these acquisitions should be reflected in future quarterly earnings. Keep an eye on this Canadian company.
Next is TFI International (ticker symbol TFII). The Montreal-based logistics company has the largest truck fleet in Canada. Now is perhaps one of the best times ever to buy TFI International stock. The shares continue to slide as interest rates and inflation rise. But over the long term, TFI stock is a solid buy for investors who expect growth in supply-chain demands and e-commerce. Estimates predict that earnings will double year over year during TFI’s next quarter. And this comes after last quarter’s earnings beat expectations (up 124% year over year). With more growth coming during what will probably be a volatile period, TFI shares should be able to withstand this market downturn. Shares trade right around 10 times earnings and are down 29% year to date. Furthermore, you’ll get a dividend yield of around 1.4%. Growing demand for consumer items, raw materials, and manufacturing components is fueling growth in the shipping industry, and TFI is benefiting. The company has a diversified customer base, with no single customer contributing to more than 5% of overall revenue. Over the past two decades, TFI International has participated in more than 180 acquisitions that have generated a total return on investment of 4800%.
Next is Magna International (ticker symbol MG). Magna is the world’s third-largest automotive components supplier and third-party manufacturer. The pandemic, the chip-supply shortage, the lockdown in China, and rising raw material prices have severely crunched the automotive sector. And lately, recession fears have suppressed demand for vehicles. These macro events have weighed on auto-related stocks during the past months and have caused auto companies to lower their guidance. But the acceptance of electric vehicles (EVs) gets stronger by the day, and Magna International has the fundamentals to tap this trend. Although the challenging macro environment has affected Magna’s profit and guidance, the company hasn’t cut dividends or capital spending. The stock is a great buy at the current dip as it could grow by the double- or even triple-digits once EV sales kick in.
Next is Waste Connections (ticker symbol WCN). Waste Connections collects, transfers, and disposes of non-hazardous solid wastes. It is also involved in resource recovery through recycling and renewable fuel generation. Although the stock markets bounced back strongly at the end of May, I expect volatility to continue in June. A potential interest rate hike by the U.S. Federal Reserve, the ongoing conflict in Ukraine, and rising oil prices could all weigh on the market. So I expect Waste Connections, a low-volatility stock, to outperform in June. Given its market share, operations mainly in exclusive or secondary markets, and integrated operations, Waste Connections enjoys high margins. It also makes strategic acquisitions to strengthen its competitive positioning and expand its presence worldwide.
Next is Barrick Gold (ticker symbol ABX). Barrick Gold is Canada’s largest mining exploration, development, and production company that primarily focuses on gold and copper. With a current five-year monthly beta of 0.06, Barrick is uncorrelated with the TSX and S&P 500. This, along with its sound balance sheet and strong cash flow, makes it a good hedge to offset some of the risk in the stock market. Barrick’s stock is also influenced by the price of gold, which gives it additional diversification benefits.
Next is Shopify (ticker symbol SHOP). Shopify’s platform helps merchants of all sizes operate online stores. Shopify is no longer Canada’s largest company by market cap. In fact, it’s very far from it as its shares have crashed since autumn. However, I remain confident that Shopify’s future is a bright one. It continues to play an important role in the global e-commerce industry, and its inclusive platform offers solutions to first-time entrepreneurs and large enterprises alike. In Q1 2022, Shopify reported $1.2 billion in revenue — a 22% year-over-year increase. What’s more, monthly recurring revenue continued to increase. Although growth in that regard has slowed down significantly, Shopify can still lay claim to the fact that this figure has never decreased over the past five years. With a huge presence in an important industry, Shopify remains a must-have in any growth portfolio.
Next is Bank of Montreal (ticker symbol BMO). This is Canada’s fifth-largest bank, with a good mix of exposure in Canada and the U.S. With the recent acquisition of Bank of the West, Bank of Montreal has the means to quickly grow its earnings per share, though integration efforts may prove somewhat costly in the future. BMO recently rang in some incredibly strong second-quarter earnings, with profit of $4.76 billion. The big bank also delivered a generous quarterly dividend increase of $0.06, or nearly 5%. Looking ahead, the bank’s corporate loan book should remain good as the oil and gas sector continues strong. Going into June, shares of BMO are close to the cheapest they’ve been since 2020. The stock trades around 7.6 times trailing earnings, making it a good bargain for those looking for a yield of around 4%.
Next is Canadian Natural Resources (ticker symbol CNQ). Canadian Natural Resources develops, produces, markets, and sells crude oil, natural gas, and natural gas liquids. As oil and gas prices increase, Canada’s biggest energy company, Canadian Natural Resources, should see superior financial growth. Since the pandemic, energy producers have enjoyed margin expansion and solid free cash flow growth, thanks to the rallying energy commodity prices. The trend will likely continue this year. CNQ stock has already returned 60% since the beginning of the year, and the company’s strong balance sheet and potential to pay out a higher dividend will likely push the stock higher. Crude oil has shown even more strength in Q2 2022 than in Q1 this year, so CNQ’s financials should increase even more than they have. With a stable dividend yield of 3.5%, CNQ stock offers attractive total return prospects for long-term investors.
Next and final stock is Toronto-Dominion Bank (ticker symbol TD). Just days ago, TD Bank shared that it beat estimates on both revenue and profit in the most recent quarter. Earnings increased a little in the quarter, which is actually a significant achievement because we might be in the midst of a recession and many other banks aren’t growing. TD benefits from the higher interest rates we are now seeing. In the second quarter, it reported higher net interest income thanks to the Bank of Canada’s interest rate hikes. So, TD benefits from the current macro climate instead of being harmed by it like some non-financial companies. As the final catalyst I’ll mention today, the company is set to close its First Horizon deal later this year, which should add to its earning power and increase its corporate loan portfolio. Great Canadian stock.
Hope you guys enjoyed these Canadian stocks I went over and talked about. Please watch my previous videos on Canadian stock recommendations and let me know of any Canadian stocks you want me to look into and give my opinion on. Let me know in the comments, since I really want to expand my knowledge in the Canadian market. If you did enjoy this video, leaving a like really helps grow the channel! Thanks for watching, I’ll see you guys in the next video!