These 3 TSX Stocks Prove Why Canada Is Still a Great Country to Bet On

Despite lacklustre stock market returns, Canada is still capable of producing incredible stocks with major upside like Dollarama Inc. (TSX:DOL) and Cargojet Inc (TSX:CJT).

| More on:
Dollar symbol and Canadian flag on keyboard

Image source: Getty Images

Canada’s stock market hasn’t experienced the same success as the U.S. in recent history. Since 2006, the S&P/TSX Composite Index has risen by roughly 40%. The S&P 500 Index, for comparison, is up nearly 125%. This outperformance has continued into 2019. Year to date, the TSX has risen 17% while the S&P 500 has popped by 25%.

But don’t abandon Canada just yet. Often, stock market indexes hide the real truth. When looking at the S&P 500, much of the outperformance came from just a handful of tech stocks, like Facebook and Netflix. Therefore, lacklustre performances by hundreds of companies have been ignored due to the exponential success of a few stocks.

The opposite has been true in Canada. The TSX is heavily dominated by resource companies that mine for precious metals or drill for oil and gas. When resource prices crashed during the 2008 financial crisis, and then again during the 2014 oil rout, entire industries lost the majority of their value. These industry-specific troubles have masked major success in other areas of the economy.

The following stocks, for example, have doubled or tripled in price over recent years, but due to their small size, they haven’t been able to meaningfully contribute to the giant TSX index. Shareholders of these companies, however, likely aren’t worried. As long as these stocks keep going up in price, it doesn’t matter what the TSX overall does.

Stocks like these prove that Canada is still a country capable of explosive growth, even if the headlines don’t always capture the success. If you want to supercharge your portfolio with Canadian companies, this list is a great place to start.

Mastering the craft

Dollarama (TSX:DOL) has mastered discount retailing. If you live in Canada, you likely know the company well considering it has 98% domestic brand name recognition. It has more than 1,000 stores throughout Canada, servicing nearly every major metropolitan area, not to mention hundreds of smaller markets. Its online store now has more than 1,000 products and helps supply Canada’s small business economy.

Over the last decade, Dollarama stock has risen by more than 1,000%. This success has come largely from its direct-sourcing model. Today, more than half of its products are purchased directly from manufacturers across 30 countries. That gives Dollarama a permanent pricing advantage and differentiated selection. Management is now targeting international growth, applying its tried-and-true formula in other lucrative markets.

Quintessentially Canadian

Canada Goose Holdings (TSX:GOOS)(NYSE:GOOS) is about as Canadian as it gets. Today, around 5% of all Canadians own a Canada Goose jacket. Few brands anywhere in the world have that level of customer loyalty.

As with Dollarama, Canada Goose is now looking to repeat its domestic success in other markets. In China, the largest luxury market in the world, fewer than 0.1% of the population owns one of the company’s products. Other high-end markets like South Korea and Europe also have massive growth opportunities.

International sales are already growing at 50% per year. If you believe in the Canada Goose brand, this stock likely has a huge runway for worldwide growth.

Serving the country

Cargojet (TSX:CJT) is the largest overnight shipper in Canada. Its grip on the market is so tight that recently bought equity in the company.

It’s not surprising that Amazon wanted skin in the game. The rise of online shopping will continue to fuel demand for rapid deliveries for decades to come. In recent years, Amazon Prime has conditioned American customers to expect two-day shipping on all orders. In 2020, Amazon is looking to make one-day shipping the norm.

If Canada is to match this feat, it will be because of Cargojet. No other company has the required scale or expertise to pull it off. This stock is getting expensive, but it represents some of the best Canada has to offer.

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.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. David Gardner owns shares of Amazon, Facebook, and Netflix. Tom Gardner owns shares of Facebook and Netflix. The Motley Fool owns shares of and recommends Amazon, Canada Goose Holdings, CARGOJET INC., Facebook, and Netflix. Fool contributor Ryan Vanzo has no position in any stocks mentioned. 

More on Investing

sad concerned deep in thought

TFSA Users: 56% of You Are Making This Huge Mistake

Use the Tax-Free Savings Account to create a portfolio of growth stocks and benefit from outsized gains over time.

Read more »

sale discount best price

3 Remarkably Cheap Stocks to Buy Right Now

These top TSX dividend stocks are trading at big discounts to their 12-month highs.

Read more »

Growth from coins

Got $3,000? 3 Growth Stocks to Double Up on Right Now

Canadian investors who have some cash to spend should look to top growth stocks like MTY Food Group Inc. (TSX:MTY)…

Read more »

woman analyze data

1 Under-the-Radar Dividend Stock to Buy and Hold

Bank of Nova Scotia (TSX:BNS) stock keeps getting cheaper, making it a top value pick for the end of September.

Read more »

tsx today
Energy Stocks

TSX Today: What to Watch for in Stocks on Thursday, September 28

The U.S. quarterly GDP data and Fed chair’s comments about the economy will remain on TSX investors’ radar today.

Read more »

close-up photo of investor Warren Buffett

The Best Warren Buffett Stocks to Buy With $300 Right Now

An investing lessons by Warren Buffett was to buy the dip. The market is giving you buying opportunity with these…

Read more »

man sitting in front of 3 screens programming
Tech Stocks

2 Growth Stocks to Hold for the Next 10 Years

Are you interested in growth stocks? Here are two picks to hold for the next 10 years!

Read more »

Canadian Dollars
Dividend Stocks

Buy 734 Shares of This Top Dividend Stock for $9,574 a Year in Passive Income

Are you looking to earn regular income? Now is an opportune time to buy Dividend Aristocrats at discounts and accelerate…

Read more »