Back in April, the S&P/TSX Composite Index had just begun its climb back from a slide that began in late January and early February. This did not stop Fiera Capital Corp. asset manager Candice Bangsund from forecasting a rally that would see the TSX reach the 17,300 point mark. As of close on July 5, the index sits above 16,200 points, but the Canadian stock market has encountered resistance in the midst of ongoing trade turmoil.
If the TSX is to pull off this rally, here are three of my top stocks that will be in a great position to power it.
Aurora Cannabis Inc. (TSX:ACB)
Aurora Cannabis has seen its stock rise 7.4% month-over-month as of close on July 5. Shares of Aurora and its competitors spiked on the news that the federal government had finally sealed the deal, setting an October date for recreational legalization. Aurora has been extremely aggressive in recent months, acquiring both CanniMed Therapeutics and MedReleaf Corp. at premium prices.
Aurora released its fiscal 2018 third-quarter results on May 8. Revenue soared 211% year-over-year to $16.1 million, reporting a 107.9% jump in cash and cash equivalents to $231 million. Aurora boasts huge production capacity and a sizable footprint in the Western provinces.
The cannabis industry is bound to encounter hurdles during the initial rollout, but long-term Aurora is a great bet. Investors should also expect enthusiasm for this sector among retail investors to ramp up ahead of the official legalization date in October.
Kinaxis Inc. (TSX:KXS)
Kinaxis was my top stock for June. Shares were relatively flat month-over-month as of close on July 5 – up 0.26%. The stock was up 14.6% in 2018, and there is reason for major optimism going forward.
In its first-quarter results, Kinaxis posted a 10% increase in revenue year-over-year and an 8% rise in adjusted EBITDA. Kinaxis was selected in January by Toyota Motor Corp., the second-largest automobile manufacturer in the world, to manage its automotive demand and supply chain. The evolution and increasing complexity of supply chains in the global economy will only help the demand for the RapidResponse solution offered by Kinaxis.
The stock is up nearly 600% since its initial public offering in June 2014. This is a growth stock that belongs in any portfolio.
Bank of Montreal stock was up 1.1% in 2018 as of close on July 5. BMO posted a solid second quarter as adjusted net income rose 13% year-over-year to $1.46 billion and adjusted earnings per share climbed 15% to $2.20. It roared with the broader TSX since mid-April and has rebounded nicely after underperforming in comparison to the other Big Bank stocks.
BMO is especially attractive due to its growth south of the border. Adjusted profit in U.S. Personal and Commercial banking climbed 43% year-over-year to $359 million in the second quarter. BMO has also made an early foray into cannabis in Canada’s domestic market, which should pay off well in the coming years. The stock offers a quarterly dividend of $0.93 per share representing a 3.6% dividend yield.
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 Ambrose O'Callaghan has no position in any of the stocks mentioned. Kinaxis is a recommendation of Stock Advisor Canada.