When it comes to distinct mixes of industries, stock exchanges don’t come much more idiosyncratic than the TSX index – from iconic clothing brands to miners to legal marijuana, a glance at these industries is all it takes to recognize the market.
But are all of these industries worth your investment? Let’s take a look at a representative stock from each sector and see whether they belong in your portfolio.
CannTrust Holdings (TSX:TRST)
This popular pot stock has had a good run of it so far, with a five-year average past earnings growth of 70.6%, which outperforms the Canadian pharma industry average of 46.4% for the same period. Up 7.64% in the last five days, it’s enjoying a 2019 market that’s looking bullish on the green stuff. Other reasons to buy include a 43.2% expected annual growth in earnings and some heady momentum stats.
Though it’s not a dividend payer — as with the other stocks listed here — CannTrust Holdings is a solid buy for two reasons: it carries no debt, and has the potential to reward investors with potential upside. Trading at twice the future cash flow value, and with an oscillating trend in share price, its five-year beta of 2.59 relative to the industry should keep momentum investors interested.
With a five-year average past earnings growth of 61,4% that outperformed the Canadian metals and mining industry average of 34.3% for the same time frame Barrick Gold is one of the best mining stocks on the TSX index. A 98.4% expected annual growth in earnings puts it squarely on the growth investor’s radar.
Debt 53.8% of net worth crosses the dangerous threshold of 40%, but not by a huge margin. Still, for the casual passive income investor looking to get in on a dividend yield of 1.2%, that kind of balance sheet may up the risk quotient.
With a currently upward trend in share price, this stock has seen some major peaks and troughs since its high two-and-a-half years ago. Having gained 6.83% in the last five days, it’s an insider favourite, with significant volumes of share having changed hands through inside buying over the past year, and at a steady rate.
Up 4.64% in the last five days and climbing, but nowhere near recovery from its December nosedive, Canada Goose Holdings is looking at a 33.2% expected annual growth in earnings. Meanwhile, growth is lower and valuation less attractive for Canada Goose Holdings, with a P/E of 73.4 times earnings and P/B of 27.1 times book, thereby signalling that the other two stocks here may be stronger plays.
That said, there may well be more upside left in this iconic clothing brand, and it could pair suitably well with a miner or a pot portfolio.
The bottom line
The value investor may sneer at CannTrust Holdings’ P/E of 53.1 times earnings and P/B of 5.6 times book, but for high growth and the potential to cash in on a swinging share price, it’s one of the best pot stocks on the TSX index. Compare that with Barrick Gold’s lower P/B of 1.7 times book but higher growth, and you have a serious contender in the mining stock.
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 Victoria Hetherington has no position in any of the stocks mentioned.