With 2017 drawing to a close, many Canadians are preparing to make annual contributions to their RRSPs. For those investors building their own stock portfolios, now is as good a time as ever to review stocks that are positioned for big growth in the long term. I want to discuss three of my top picks for 2018 today.
Aurora Cannabis Inc.
Aurora Cannabis Inc. (TSX:ACB) stock has surged an impressive 87.5% month over month as of close on November 16. This is with shares shedding over 15% in the last two trading days as of this writing. In an August article, I’d discussed whether or not investors should buy the dip at Aphria Inc. or Aurora, and I settled on Aurora due to its attractive pricing at the time.
The Vancouver-based cannabis producer and distributor has benefitted from a renewed investor frenzy in cannabis stocks. Aurora stock also comes at an attractive price and is one of the top producers in the country. It is currently constructing the nation’s largest cannabis production facility in Edmonton.
Experts and analysts expect the Canadian recreational cannabis industry to be worth $10 billion or more annually. As of this writing, Aurora Cannabis is exploring a takeover bid of CanniMed Therapeutics Inc., a Saskatchewan-based medical cannabis company. Aurora is making a concerted push into European markets, and it has quickly established itself as a must-own cannabis stock on the TSX.
Constellation Software Inc.
Constellation Software Inc. (TSX:CSU) is a Toronto-based software company that services both the private and public sector. The stock has climbed 21.5% in 2017 and 16% year over year. In its August 2017 GDP report, Statistics Canada reported that computer systems and related services activity was up 0.5%, and the public sector grew 0.2%.
Constellation Software released its third-quarter results on October 26. Revenue jumped 17% to $637 million, and net income fell 20% to $54 million compared to $68 million in Q3 2016. Adjusted EBITDA increased 15% to $162 million compared to $140 million in the previous year. Total revenues were up 18% to $68 million in public sector services and 13% to $23 million in the private sector.
The stock offers a dividend of $1.28 per share, representing a 0.7% dividend yield.
The Montreal-based retailer Dollarama Inc. (TSX:DOL) has seen its stock climb 53.9% in 2017 and 58% year over year. Dollarama gained further momentum after the release of its fiscal 2018 second-quarter results on September 7. Sales were up 11.5% to $812.5 million and EBITDA jumped 24.1% to $209.2 million.
In a September article, I’d discussed why Dollarama was a great pick looking ahead due in large part to the rise in profitability of dollar stores in North America. A study from global research and advisory firm IHL Group estimated that U.S. retailers would open more than 4,000 dollar stores in 2017 — a figure that will rise to 5,500 in 2018.
Dollarama stock also offers a modest dividend of $0.11 per share with a 0.3% dividend yield.