The forecast for the Greater Toronto Area as I write this is for up to 20 centimetres of snow, making the commute trickier than usual.
So, take your mind off the dreary Canadian weather and think about these three fun stocks; they’ll all warm up your portfolio.
One of Canada’s greatest recreational assets
If you’re a shareholder of BRP (TSX: DOO)(NASDAQ:DOOO), you’re probably rubbing your hands with glee. Snow is always a good thing when it comes to Ski-Doo sales. But, of course, that’s not the only product line the Bombardier spin-off sells. In fact, it’s not even the company’s biggest breadwinner.
That distinction belongs to BRP’s year-round products that include SSVs and ATVs marketed under the CanAm brand. In the nine months ended October 31, 2018, BRP’s year-round products had sales of $1.64 billion, more than $400 million higher than its seasonal products, which include Ski-Doo snowmobiles and Sea-Doo personal watercraft.
Despite the company’s strong sales over the past year, analysts are nervous about its growth slowing — something I talked about in early December, shortly after BRP hit a 52-week low of $40.23. Since then its stock’s gotten as low as $32.36 in late December, putting a real freeze into DOO stock.
If you’re looking for a second opinion on BRP, my Foolish colleague Kris Knutson recently discussed why it might be a ride worth taking.
As fun stocks go, BRP is a must own, especially at current prices.
A growth stock like no other
Great Canadian Gaming (TSX:GC) had a great year on the S&P/TSX Composite Index, generating a total return of 42% in 2018, miles ahead of the index and easily one of its top performers. Almost a month into 2019, Great Canadian’s stock’s carried on from where it left off, up 12% year to date through January 25 — more than 400 basis points higher than the TSX.
If there’s one thing I know about gamblers, it’s that good weather or bad, they’ll come out in droves, making Great Canadian the perfect all-season growth stock.
Despite all the gains Great Canadian’s stock has made over the past 13 months, its current valuation is relatively reasonable, trading at 9.5 times cash flow and 17.2 times its forward P/E.
Back in May, I recommended Great Canadian’s stock over Stars Group because it uses much less leverage in its business. In 2019, I expect companies with less debt to outperform. Heading into February, I’d still recommend CG over TSGI.
One of Canada’s most misunderstood stocks
If there’s another mid-cap TSX stock — excluding the energy sector — that’s had a worse time the last two years than Cineplex (TSX: CGX), I’d love to hear about it.
As consumer stocks go, Cineplex’s been beaten into submission by skeptics like the Fool’s Joey Frenette the last two years, most recently recommending that investors sell immediately, arguing that video streamers will win the day over traditional movie theatres.
I’ve been on the opposite side of the argument, reminding investors that CEO Ellis Jacob has seen and heard how traditional movie theatres are yesterday’s news — think VHS, DVDs, on-demand, video streaming … the list goes on — and every time they’ve managed to come wading back into the collective consciousness of Canadians.
As long as people need and want to be with other people, movie theatres will remain a place to congregate.
Fool contributor David Jagielski recently called Cineplex underrated, suggesting its strong yield (6.1%) makes it a very attractive holding for your TFSA.
I couldn’t agree more.
Up 11% year to date, Cineplex is on the move to $30 and beyond.
