2 Canadian Stocks to Own as the Bull Market Matures

Here’s why Waste Connections Inc. (TSX:WCN)(NYSE:WCN) and a top international food stock deserve a closer look.

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Stock markets continue to charge ahead, despite ongoing international trade concerns.

Even without the tariff battles, the bull market is likely getting a bit long in the tooth. As a result, investors who are putting new money to work might want to consider companies that are positioned well to ride out a correction.

Let’s take a look at Waste Connections (TSX:WCN)(NYSE:WCN) and Saputo (TSX:SAP) to see why they might be interesting picks.

Waste Connections

Waste Connections is a waste removal, recycling, and landfill operator in Canada and the United States. The company also owns a non-hazardous oilfield waste treatment, recovery, and disposal business. In total, Waste Connections has more than six million residential, commercial, industrial, and energy sector customers located in 40 U.S. states and six Canadian provinces.

The company reported solid Q2 2018 results. Revenue came in at $1.24 billion compared to $1.176 billion in the same period last year. Adjusted net income was $172.3 million, or $0.65 per share, compared to $145.5 million, or $0.55 per share, in Q2 last year.

Due to the strong start to the year, Waste Connections raised its 2018 guidance. Revenue is now expected to be $4.88 billion, up from $4.825 billion. Free cash flow is expected to be $860 million, compared to the previous estimate of $850 million.

In the Q2 statement, the company said it is positioned well to continue its acquisition strategy and maintained its target of raising the dividend by at least 10% per year. Revenue growth and margin expansion are expected to continue due to favourable market conditions.

The stock price has increased from $35 per share five years ago to the current price of $103, and more gains should be on the way.


Saputo has grown from being a small family-run dairy operation to being one of the largest dairy producers in the world. In fact, Saputo is the largest cheese manufacturer and the leading milk and ice cream processor in Canada. It is the top dairy producer in Australia and number two in Argentina. In the United States, Saputo is among the top three cheese producers.

Saputo continues to make strategic acquisitions to diversify revenue streams by product and geographic region, enabling the company to position itself to adapt to changing trade rules in the industry.

The results for the most recent quarter were weaker than the same period last year, primarily due to acquisition costs and foreign exchange movements. Management can’t be overly concerned, as the company just raised the quarterly dividend from $0.16 to $0.165 per share.

The stock currently trades for $41 per share. Five years ago it was $24.

The bottom line

Waste disposal and cheese might not be the most exciting businesses to talk about with your friends, but Waste Connections and Saputo should be solid buy-and-hold picks to help your portfolio ride out a downturn in the broader market.

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 Andrew Walker has no position in any stock mentioned. Saputo is a recommendation of Stock Advisor Canada.

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