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 July. 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 Aritzia (ticker symbol ATZ). Thanks to its strong leadership team with a track record of successful execution, Aritzia has a healthy balance sheet. The clothing company’s brand is becoming more recognized, and it continues to expand in the U.S. with plenty of runway for further growth. Management plans to open eight to 10 stores in fiscal 2023, mostly in the States. Aritzia is also experiencing strong e-commerce growth. Longer-term, management’s goal is to increase e-commerce revenue to more than 50% of the business. With a Price to Earnings ratio of 24.7, Aritzia isn’t exactly a cheap retail stock, but the share price is currently trading below its historical average, according to Bloomberg. Aritzia had incredible financial results on July 7th, it’s a great Canadian company to look forward to.
Next, we have TransAlta Renewables (ticker symbol RNW). The energy industry is shifting from fossil fuel to renewables as the United States and Europe pledge to reduce carbon emissions by 2030. The demand for renewable energy is growing beyond the usual industries, offices, and residences and into new opportunities such as electric vehicle (EV) charging stations and crypto mining farms. However, the global energy crisis spurred by the Russia-Ukraine war has shifted investors’ focus to oil stocks and pulled down TransAlta’s shares. The company is currently trading around the same price it was in September 2020, washing away gains from the U.S. clean energy bill. However, TransAlta’s business fundamentals are strong, and the government’s support for renewable energy is unchanged. I think now is the right time to buy the stock and enjoy its 5.6% dividend yield.
Next, we have Granite Real Estate Investment Trust (ticker symbol GRT-UN). After a 25% decline in its stock, Granite REIT looks goodt. Today, it trades at a discount to other U.S. industrial REITs. Also, its stock is the cheapest it’s been since the pandemic. Despite rising interest rates, Granite has a rock-solid balance sheet with long-dated debt (locked-in at very low rates) and more than $1 billion of liquidity. Inflation continues to rise, but the company continues to see double-digit rental rate growth. This will more than support the company’s current 3.9% dividend yield. The REIT has raised its dividend annually for the past 12 consecutive years. For a defensive dividend-growth stock, Granite REIT is a great choice to own for the long term.
Next, we have Teck Resources (ticker symbol TECK-B). Market volatility is not only the order of the day, but economists think a recession could also be coming. It’s a smart time to get into defensive stocks like Teck Resources. The company is involved with natural resources including gas, steel-making coal, copper, zinc, silver and more. These natural resources will remain vital ingredients to industry no matter what the economic future holds. Teck Resources offers a 1.2% dividend, and its shares have continued to climb this year, not fall along with almost all the others. The stock is currently up 17% year to date, far outpacing the TSX. And it remains a long-term winner any investor should consider holding for the duration: It’s up 520% in the past two decades.
Next, we have Dollarama (ticker symbol DOL). In the face of a volatile market, Dollarama stock has stood strong and is rallying to all-time highs. Dollarama operates more than 1,400 stores across Canada, significantly more than its peers. Shares have gained 32% since last year, notably outperforming the TSX. Dollarama offers its shoppers great values, which becomes all the more desirable in an inflationary environment like today’s. As a result, the discount retailer enjoys stable revenue and earnings growth in almost all economic cycles. Thus, investors perceive it as a safe haven and take shelter in DOL when the broader markets turn rough. If the economy indeed slips into a recession, as many fear it will, Dollarama will likely continue to beat the market thanks to its stable earnings and less volatile stock.
Next, we have Fortis (ticker symbol FTS). Given the market volatility, my stock pick for the month is a low-beta dividend aristocrat. Low-beta stocks are those with less sensitivity to the overall stock market, and dividend aristocrats are companies that have paid at least 25 years of consecutive dividend payments. Fortis fits this description well, with a five-year monthly beta of 0.11 and a five-year average dividend yield of 3.6%. Currently, the company pays a dividend of $2.11 per share for a forward annual yield of 3.6%. Fortis has outperformed the TSX since it went public and continues to serve as a great low-volatility, blue-chip stock in many dividend growth investors’ portfolios.
Next, we have Loblaw Companies (ticker symbol L). Loblaws shares continue to outperform the broader market, having risen more than 11% year to date compared with the TSX’s 11% loss. As the broader market selloff continues to accelerate amid concerns about a looming recession, investing in essential goods and services providers like Loblaw could be a wise decision. Although inflationary pressures might trim its profits in the near term, I expect continued demand for its essential products to help it maintain a positive earnings growth trend and drive its stock higher.
Next, we have Cenovus Energy (ticker symbol CVE). Cenovus Energy stock is basically a bet on oil prices. WTI Crude dipped last month, but taking a long-term view, oil looks set for a solid year. One of the big factors contributing to the recent dip in oil prices was the U.S. Strategic Petroleum Reserve release. That added some supply to the market, but it won’t last forever; there is only so much oil in the reserve. In the meantime, OPEC is out of spare capacity and the EU still plans to cease 90% of Russian oil imports by the end of the year. So, oil will likely end the year strong. CVE benefits from high oil prices because it extracts and sells oil. Its business is based on selling oil, as well as selling gasoline at gas stations. Business is booming this year. In its most recent quarter, CVE’s cash from operations increased 499%, and net income increased 639%. It was a strong showing, yet CVE stock still trades at just 8 times operating cash flow. Definitely an oil play worth considering in July.
Next, we have Alimentation Couche-Tard (ticker symbol ATD). Summer is driving season across North America. In 2022, this is probably the first “normal” summer since the pandemic. That means a rebound in demand for travel and fuel, which is a tailwind for Alimentation Couche-Tard. The company is well-positioned to benefit from rising fuel prices and relentless demand. The stock has been overlooked, which is why it’s so cheap today. It’s trading at just 16.7 times earnings per share. Couche-Tard could be an ideal target for investors seeking a safe haven during market turmoil in the months ahead.
Next, we have Suncor Energy (ticker symbol SU). Shares of Suncor Energy have gained nearly 62% in one year. Despite this increase in value, higher commodity prices make me optimistic about Suncor’s growth prospects over the next couple of years. Further, strong demand and higher production and utilization rates will likely support its growth. What’s more, Suncor’s focus on optimizing its integrated assets portfolio, divesting non-core businesses, and reducing cash operating costs per barrel bode well for growth. The company’s accelerated pace of debt reduction, share buybacks, and solid dividend payments are positives, as well.
Next, we have Brookfield Asset Management (ticker symbol BAM-A). BAM is as close to an index fund as you’ll find on the TSX. The company provides its shareholders with instant diversification from its wide-ranging portfolio of assets. But despite having a well-diversified business line, BAM has managed to outperform the Canadian stock market’s returns on a consistent basis in recent years. The short-term uncertainty in the stock market is why BAM is on my watch list this month. The company could help provide my portfolio, which tends to skew toward high-growth tech stocks, with both diversification and stability during upcoming potentially volatile market conditions. The market correction has finally brought BAM down to a decent price for investors seeking long-term price appreciation. Analysts are calling it a discount of about 29%. The company pays a dividend yield of about 1.2%. However, BAM’s real jewel is its ability to generate long-term returns on investments of 12% to 15%. In other words, buying shares in the large-cap growth stock now could lead to long-term annualized returns that are closer to 15%, if not higher.
Finally, we have Canadian National Railway (ticker symbol CNR). CNR could provide investors with a stable dividend to help get through this shaky market. And with a five-year beta of 0.70, Canadian National Railway (TSX:CNR) is noticeably less volatile than the market as a whole. With steady growth potential and a reliable dividend to boot, this is one stock you shouldn’t pass on this month.
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!