Looking for Better Returns? These 3 Stocks Have Outperformed the TSX

Canadian National Railway Company (TSX:CNR)(NYSE:CNI) and these two other stocks have outperformed the market in 2017 and could be great buys today.

Up until recently, the TSX yielded no returns for investors, but as the price of oil has increased, so too has the index. However, with an increase of just 2% year to date, the returns we have seen for the TSX are still nothing to brag about, and it would be understandable for investors to want to look for well-performing stocks that can achieve higher gains than the market. The three stocks I have listed below have all seen great returns this year and could still be great buys today.

Canadian National Railway Company (TSX:CNR)(NYSE:CNI) has seen its share price rise 14% in 2017, and after recovering from a recent dip, there may still be lots of upside left for the stock. Shortly after the company’s Q2 earnings in July, the stock dropped to under $100 and has since recovered as it approaches earnings later this month. As the economy continues to grow, railroads will transport more goods, and we should expect better results from Canadian National Railway as a result.

The stock might be a bit expensive for value investors with a price-to-earnings multiple of 20 and the shares trading at more than five times book value. However, Canadian National Railway saw strong growth in its last quarter with revenues up 17% year over year and profits also having improved by 20%. Another good quarter could give the stock a big boost and potentially send it to new highs.

Canadian Tire Corporation Limited (TSX:CTC.A) has had an up and down year so far in 2017 with its share price reaching highs of $170 and lows of $138. Currently, the stock sits around $155, and it has generated 12% returns year to date as the company got a boost from a strong Q2, where it saw its net income increase 9% from the previous year. However, Canadian Tire’s flagship brand has struggled to see sales increase, and its Mark’s stores are fueling a lot of the company’s growth. Over the long term, I would have concerns about how Canadian Tire will be able to grow its sales, especially in a struggling retail industry.

Currently, the stock trades at 15 times earnings and a multiple of over three times its book value, which provides decent value for one of Canada’s most recognizable brands. Although the stock has shown some volatility this year, with a strong quarter, it could get back up to highs of around $170, which would net you a decent 10% gain off where the price is today.

Gildan Activewear Inc. (TSX:GIL)(NYSE:GIL) is another high-performing stock with its share price rising over 14% this year, and more could still come as the company acquired the popular American Apparel brand earlier this year. The big question mark is how U.S. consumers will react to the American Apparel brand being manufactured outside the U.S. and if that will hurt the brand’s sales.

What I like about the company is that in the past four years, it has averaged strong profit margins of 13%, while seeing sales rise in two of the past three years, and the growth should only continue with contributions from its new acquisition.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor David Jagielski has no position in any stocks mentioned. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of Canadian National Railway. Canadian National Railway is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »