Ryan Vanzo: Brookfield Infrastructure Partners
Since 2009, shares of Brookfield Infrastructure Partners L.P. (TSX:BIP.UN)(NYSE:BIP) have risen by nearly 500%, and for good reason. The company is exposed to one of the most reliable growth drivers there is: population growth.
By 2040, it’s estimated that 2 billion more people will be living on earth, adding demand to critical infrastructure like roads, pipelines, seaports, and power plans. By investing in infrastructure projects around the world, Brookfield benefits directly from this long-term trend.
In 2018, its shares fell by roughly 20%, providing a rare buying opportunity. Over the past decade, they have finished in negative territory only one other year. Recent weakness has pushed its dividend yield up over 5%. If you’re looking for a rock-solid business for 2019 and beyond, Brookfield continues to be a great bet.
Fool contributor Ryan Vanzo has no position in this company at the time of publication.
Amy Legate-Wolfe: Horizons S&P/TSX 60 ETF
While other Canadian stocks have slumped to all-time lows in this volatile market, Horizons S&P/TSX 60 ETF (TSX:HXT) has continued on a relatively steady streak. For 2019, I would jump on Horizons while it’s still relatively cheap.
There are a couple great reasons to choose this ETF, but there are two that put it ahead of other ETFs. First off, the stock only chooses the top 60 stocks on the TSX. This makes the share price a lot cheaper than other ETFs, and a fraction of the cost of the S&P/TSX Composite index.
The second reason is that the ETF is run by artificial intelligence. While other ETFs have people picking stocks based on gut, this stock picks based on data. So once the market is less volatile, this stock should be one of the first to see some great gains.
Fool contributor Amy Legate-Wolfe does not own shares of Horizons S&P/TSX 60 ETF at the time of publication.
Joey Frenette: Restaurant Brands International
My top pick for 2019 is Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR), a Canadian fast-food juggernaut that has decades worth of low-risk growth left in the tank. The company has endured rough waters all year, and while there have been a fair amount of issues, in no reasonable market should the stock be trading at just 13.8 times forward earnings given the potential for high double-digit EPS growth numbers.
Restaurant Brands sports a bountiful 3.4% dividend yield, but make no mistake; the company is still growth-oriented in spite of its handsome payout and stalwart valuation that’s more indicative of a behemoth firm that’s at the end of its growth cycle.
As a seller of “inferior goods”, Restaurant Brands is less sensitive to the market cycle. And given we’re heading for a drastic economic slowdown in 2019, I’d say Restaurant Brands stock is a fantastic place to play defence without having to compromise on the growth front.
Fool contributor Joey Frenette owns shares of Restaurant Brands International Inc at the time of publication.
Christopher Liew: Aurora Cannabis
Marijuana investors got a hard dose of reality as most stock prices plummeted after legalization in Canada. Where Aurora Cannabis Inc. (TSX:ACB)(NYSE:ACB) wins out is that it is projected at 570,000 kilograms production yield in 2019 and potentially 700,000 kilograms in less than five years.
Also, Aurora expensed out US$700 million to: a) invest in other marijuana firms, b) build huge production facilities and c) strike strategic partnerships for international expansion.
As of December 21, 2018, the shares of Aurora Cannabis are $6.67 which is less than same price one year ago. It was a roller-coaster ride just the same in between those dates. The highest closing in 2018 was $15.07 posted on October 15. Aurora was beginning to roll since the NYSE listing but lost all positive momentum due to the market selloffs.
But with the cash cows the company possess, Aurora Cannabis could easily regain momentum. The price could quickly double once the market stabilizes next year.
Fool contributor Christopher Liew has no position in Aurora Cannabis at the time of publication.
Will Ashworth: Canada Goose
Canada Goose Holdings Inc. (TSX:GOOS)(NYSE:GOOS) had a great year in 2018 from a financial perspective growing revenue to $666 million for the trailing 12 months ended September 30, 2018, while sending $102 million to the bottom line.
Although it finished this past year with a total return of 50.3%, it stumbled badly down the stretch, losing about a quarter of its value in the final three months of the year.
Not to worry.
With a trifecta of growth — wholesale, online, and brick-and-mortar — 2019 is sure to be another successful year for the Toronto-based maker of parkas and other outdoor wear.
On December 28, Canada Goose opened its first store in Mainland China, to huge crowds. It now has a store in both Hong Kong and Beijing with potential for a few more in the future.
Asia is a big reason I believe Canada Goose stock will win in 2019.
Will Ashworth does not own any of the stocks mentioned at the time of publication.
Stephanie Bedard-Chateauneuf: Alimentation Couche-Tard
Alimentation Couche-Tard Inc. (TSX:ATD.B), North America’s largest independent convenience store operator, is my top stock for 2019.
After underperforming between March and July last year, Couche-Tard’s stock took off at the end of October and is now trading above $67.
That inflection can be explained by a strong rise in same-stores sales and organic sales growth following the acquisitions and successful integrations of CST Brands and Holiday Station stores. Same-store sales rose by 5.1% in Canada, 4.4% in the United States, and 4.6% in Europe during the latest quarter.
In December, Couche-Tard and CrossAmerica Partners made a swap deal in which 265 sites will change hands in a series of transactions over a period of 24 months. This deal should optimize the long-term value of the retail stores transferred and strengthen Couche-Tard’s core retail business.
Couche-Tard should perform better when the market is struggling because it is a defensive stock.
Fool contributor Stephanie Bedard-Chateauneuf owns shares of Alimentation Couche-Tard Inc at the time of publication.
Tom Hoy: CAE
This Canadian company manufactures simulation technologies and offers training services to the airline, defence, and healthcare industries. Since all of these industries are heavily influenced by government spending, there are robust recurring revenue opportunities, which make financially sound companies operating within this space a safe bet for long-term growth.
With strong year-over-year performance and over $500 million of cash on the balance sheet, CAE’s solid fundamentals provide the management team with flexibility in terms of product expansion and development. In addition to financial health, changing market dynamics will increase demand for cost-effective training solutions especially in the airline industry, which is currently experiencing a pilot shortage.
In brief, CAE’s exposure to highly regulated industries where there is expected increased demand for services should propel this stock upward.
Fool contributor Tom Hoy has no position in any of the stocks mentioned at the time of publication.
Demetris Afxentiou: Shaw Communications
After the volatile 2018 we just went through, investors looking for solid growth prospects wrapped in a defensive package for 2019 should strongly seriously consider taking a position in Shaw Communications Inc. (TSX:SJR.B)(NYSE:SJR).
Beyond the typical defensive advantages offered by a telecom, Shaw continues to benefit from its growing subscriber base attributed to its still new and increasingly popular wireless service, Freedom Mobile. Freedom Mobile has already captured 5% of the market from the incumbent Big Three in just over a year and given the massive marketing rollout of the carrier into retailers across the country set to occur over the next month, there are clearly good times ahead for this market disruptor.
If Shaw’s growth opportunity and stable business are not reason enough for investors to jump on board, then perhaps the alluring monthly divided with an appetizing yield of 4.79% will provide the necessary incentive to buy and hold what is otherwise an incredible long-term investment for 2019 and beyond.
Fool contributor Demetris Afxentiou owns shares of Shaw Communications at the time of publication.
Karen Thomas: Badger Daylighting
2019 may just be the year for Badger Daylighting Ltd. (TSX:BAD), a $1.2 billion stock that is seeing an acceleration in its revenue, cash flows, and earnings.
In its third quarter report, Badger reported a 20% increase in revenue, 31% increase in its adjusted EBITDA, and a 57% increase in EPS, as activity and pricing was strong and the company continued to achieve benefits of scaling.
In the first nine months of 2018, revenue increased 20%, adjusted EBITDA increased 25%, and cash flow from operations increased by 27%.
With an increasingly diversified revenue base, this excavation giant continues to grow organically and via acquisition.
Badger has enjoyed a 15.5% 10-year compound annual revenue growth rate, EBITDA margins of between 25% and 30%, and continues to benefit from a solid balance sheet, thus giving it the flexibility to continue to grow organically and via acquisitions.
Trading at 18 times this year’s earnings, this stock is a steal.
Fool contributor Karen Thomas does not own shares of Badger Daylighting Ltd at the time of publication.
Nelson Smith: Brookfield Property Partners
My top stock for 2019 is Brookfield Property Partners LP (TSX:BPY.UN)(NASDAQ:BPY) because it offers exactly what investors should be looking for — great assets at a bargain price.
Brookfield owns some of the world’s finest real estate, like Canary Wharf in London, Brookfield Place in New York City, Potsdamer Platz in Berlin, and much more. In total, the company’s owns some $90 billion worth of high-quality real estate.
The other important part is the price. These wonderful assets are currently trading hands at a big discount to book value. Shares are also cheap on a price-to-funds from operations perspective. And investors are paid a succulent 7.4% dividend while they wait.
Fool contributor Nelson Smith owns Brookfield Property Partners LP shares at the time of publication.
Prosper Bakiny: Shopify
Shopify Inc. (TSX:SHOP) (NYSE:SHOP) provided a net return of about 32% to investors last year, which compares very favorably to the IT industry and the TSX. The scary part is that 2018 was not such a great year for SHOP. The company’s share price was practically stagnant compared to years past, and the Ottawa based e-commerce platform once again recorded a net loss.
Once SHOP’s recent performance on the stock market is put in perspective, the company’s potential is evident, and the possibilities are endless. SHOP offers a unique experience to business owners who are unlikely to switch to one of its competitors once they have put the time and effort to market their business on the company’s platform.
SHOP is still in the process of adding various services to its arsenal, and the company has yet to stabilize operating expenses. These are merely details, though, and once SHOP works out these kinks and becomes profitable, I believe investors will be rewarded. That is why SHOP is my top stock pick for 2019.
Fool contributor Prosper Bakiny owns shares of Shopify at the time of publication.
Matt Smith: Parex Resources
Parex Resources Inc. (TSX:PXT) recently completed a strategic review aimed at unlocking value and is poised to deliver strong returns. Management believes that the market isn’t recognizing its fair-value and initiated a share buyback which will lift its value. Parex’s high-quality Colombian oil acreage, long-life reserves of 162 million barrels 99% weighted to oil, growing production and rock-solid balance sheet make it an industry-leading play on higher oil. Parex ended the third quarter 2018 with no long-term debt, US$200 million undrawn from an existing credit facility and US$361 million in cash.
Parex expects 2019 oil production to expand by 22% year over year to 54,000 barrels daily which along with firmer crude will substantially boost earnings. Its ability to access premium Brent pricing gives it a financial advantage over North American oil producers. This enhances profitability resulting in industry-leading netbacks which at US$60 Brent for 2019 are forecast to be around US$34 per barrel produced and generate impressive free cash flow of US$260 million.
Fool contributor Matt Smith has no position in any stocks mentioned at the time of publication.
David Jagielski: AltaGas
AltaGas Ltd (TSX:ALA) is my top stock pick for 2019. The stock incurred heavy losses in 2018 and saw half of its value disappear but I believe it is due to make a significant recovery this year. The company finished the previous year with a bad quarter which was filled with acquisition-related costs that ensured the stock would continue to fall in price. Investors were also likely avoiding the stock given its high yield, which wasn’t cut until recently.
However, with a more manageable payout and the noise from the WGL Holdings acquisition now out of the way, there’s ample room for AltaGas to run, especially with new market opportunities paving the way for a lot of growth. The stock is trading well below its book value and is a bargain buy as it has the potential to double in price this year.
Fool contributor David Jagielski owns shares of ALTAGAS LTD at the time of publication.
Mat Litalien: Open Text
It was a rough year for tech stocks in 2018. Although market volatility is expected to continue, one stock that should rebound nicely is Open Text (TSX:OTEX)(NYSE:OTEX).
Since posting disappointing first quarter results, the company has once again ramped up M&A activity. It has signed partnership deals with Salesforce, Google and Sun Chemical. Likewise, it closed on its acquisition of Liaison Technologies for $310 million. The acquisition is expected to have a big impact on second quarter results.
Open Text is trading approximately 20% below its 52-week highs and at a cheap forward price to earnings (P/E) ratio of 15.02. It is trading well below historical averages and has a P/E to Growth (PEG) ratio of 1.07. As such, it is one of the cheapest companies in the sector and is my top pick for 2019.
Fool contributor Mat Litalien is long Open Text Corp at the time of publication.
Andrew Button: Canadian National Railway
Canadian National Railway (TSX: CNR) (NYSE: CNI) beat the TSX average in 2018, ending the year down just 1% while the TSX declined 11.6%. Factoring in the dividend, the stock delivered a moderately positive return to investors.
However, looking at a longer timeframe, CNR has performed brilliantly. Since 2006, the stock has more than quadrupled in value. Especially with dividends reinvested, this stock has handsomely rewarded long term holders. And it’s still well positioned heading into 2019. In its most recent quarter, the company grew net income by 18% and diluted EPS by 15%.
This stock is not without its risk factors. Harsh winters can create challenging times for transportation companies, as we saw with CNR in Q1 of last year. However, the general trajectory for this company is unambiguously positive.
Fool contributor Andrew Button does not own shares in Canadian National Railway at the time of publication.
Neha Chamaria: Brookfield Renewable Partners
Brookfield Renewable Partners L.P. (TSX:BEP.UN)(NYSE:BEP) lost nearly 25% in 2018, pushing its dividend yield to a hefty 7.6%. The renewable energy giant’s stock is off to a strong start to 2019, signaling there’s significant steam left even as investors enjoy high yields.
You see, Brookfield’s performance through the nine months ended Sept. 30, 2018 doesn’t justify the drop in its share price. It grew:
- Power generation capacity by 36.5%
- Revenue by 12%
- Funds from operations (FFO) by 7%.
Brookfield is on track to deliver strong numbers for fiscal 2018. Through 2022, it aims to grow FFO at a compound rate of 8.5% and annual dividend by 5-9%. As one of the world’s largest public pure-play renewable energy companies, Brookfield has tremendous growth opportunities ahead as more countries switch to clean energy, making this an opportune time to buy the high-yield stock.
Fool contributor Neha Chamaria has no position in this company at the time of publication.
James Watkins-Strand: Information Services
In the face of uncertainty, I favour niche companies that provide essential services in all environments. Accordingly, my top stock for 2019 is Information Services Corp. (TSX:ISV).
ISC works with public data and records, delivering registry services, information management, and technology solutions.
In government, ISC has a 20-year service agreement with the Province of Saskatchewan that expires in 2033 and holds a service license in Ontario that lasts until 2021. The company’s private sector customers are largely involved in law and finance.
Through a combination of organic growth and strategic acquisitions, ISC has put itself on a healthy growth trajectory. Equally, the company has positioned itself such that it has somewhat of a moat.
Trading at a price-to-earnings multiple of around 16, and yielding more than 5%, there are good reasons to be optimistic about ISC in 2019.
Fool contributor James Watkins-Strand does not own shares in ISC at the time of publication.
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David Gardner owns shares of Canadian National Railway. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of Canadian National Railway, Open Text, RESTAURANT BRANDS INTERNATIONAL INC, Shopify, and Shopify.