Top Stock Picks for February

We asked our best analysts to share their favourite stocks this month. Martinrea International (TSX:MRE), TransAlta Corporation (TSX:TA)(NYSE:TAC), and Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR) are among their picks.

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We asked our best analysts to share their favourite stocks this month. Here are their picks.

Karen Thomas: Martinrea International (TSX:MRE)

Companies that have a big portion of US dollar-denominated revenues, combined with Canadian dollar-denominated expenses will see benefits from the weakening Canadian dollar. Martinrae International (TSX:MRE), an autoparts supplier, is one such company. The company generates 38% of its revenue from the U.S. and almost 20% from Europe, and trades at an attractive P/E of 7.6 times expected 2015 EPS.

With a new CEO and management problems behind the company, it can focus on cost cutting and new growth programs. While there are still issues that the company is facing, as evidenced in recently reported third-quarter results that showed lower production on some models and higher than expected launch costs on the new facilities, the stock’s valuation, in my view, already reflects this.

Fool contributor Karen Thomas does not own shares of Martinrae International.


Nelson Smith: Pizza Pizza Royalty Corp (TSX:PZA)

With stock markets now entering their sixth year of practically uninterrupted growth, I’m starting to get a little nervous. Which is why I’m bullish on Pizza Pizza Royalty Corp (TSX:PZA).

The owner of the Pizza Pizza and Pizza 73 brand names doesn’t do a whole lot except sit back and collect 4% of franchisee sales. Since pizza is a pretty steady menu item and the company’s brands are already well established, this translates into a predictable 5.4% yield with a little dividend growth attached. It’s a good business for unpredictable times.

I predict low interest rates will be one of the big stories in 2015. If that’s the case, this stock should continue to rise since investors will be willing to pay more for dependable yield.

Fool contributor Nelson Smith does not own shares in Pizza Pizza.


Andrew Walker: TransAlta Corporation (TSX:TA)(NYSE:TAC)

TransAlta Corporation (TSX:TA)(NYSE:TAC) has struggled recently but long-term investors should see the light at the end of the tunnel.

Alberta’s legislated power purchase arrangements (PPAs) are set to expire in the next few years and TransAlta expects to see a strong boost to free cash flow as a result.

TransAlta is also expanding overseas. The company has a new contract to build, own, and operate a gas-fired power plant in Western Australia. The deal should pave the way for similar projects moving forward.

The current hedging program should be sufficient to protect TransAlta’s 6.5% dividend.

Fool contributor Andrew Walker owns shares of TransAlta Corporation.


Matt Smith: Vermillion Energy Inc. (TSX:VET)(NYSE:VET)

Despite oil hitting its lowest price in over five years, there are some companies that remain profitable and now offer value. One that stands out because of its globally diversified portfolio of oil assets and steadily growing production is Vermillion Energy Inc. (TSX:VET)(NYSE:VET).

Over the last six months its share price has plunged 33% leaving it attractively priced with an EV of seven times its EBITDA. More impressively, despite slashing its 2015 capex by 22%, Vermillion expects oil production to grow a very healthy 15% for the year.

While crude prices may remain low for 2015, I expect them to rebound in 2016 as lower U.S. oil production and increasing global economic growth alleviates the current supply glut.

For all of these reasons Vermillion is well positioned to cash in on the rebound in oil prices. 

Fool contributor Matt Smith does not own shares in any of the companies mentioned. 


Cameron Conway: Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR)

With the announcement that an unreleased number of corporate employees are to be laid off, Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR) has begun the initiate the first phase of the 3G Capital playbook. Typically when these types of announcements occur, the market generally reacts favorably to them.

It is expected that the stock should begin an upward momentum which is expected to carry into the next two years as 3G Capital begins to make its traditional rounds of internal cuts. For investors of the newly merged Tim Hortons and Burger King, the time is still right to begin looking into this company.

Fool contributor Cameron Conway does not own any shares in the companies mentioned.

Robert Baillieul: DHX Media Ltd (TSX:DHX.B)

If you have kids, then you’re definitely familiar with the work of DHX Media Ltd (TSX:DHX.B).

The Halifax-based company is the world’s leading creator of family entertainment, with well-known shows like Caillou, Teletubbies, In the Night Garden, Inspector Gadget, Johnny Test, and the multi-award winning Degrassi franchise. However, the company really grew to prominence in 2013 when it acquired the Family and Disney Channel from Bell Media.

Today, investors are just starting to appreciate DHX’s recurring and growing income stream. The company’s library of programs is becoming a big business, especially now that it’s easily accessible through computers and mobile devices.

Fool contributor Robert Baillieul has no position in any stocks mentioned.  

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.

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