With the year coming to a close, I look back to name my three top TSX stock picks of 2019.
Top pick no. 1
I remember writing about Air Canada (TSX:AC)(TSX:AC.B) in December 2018 and why this airline company was losing altitude. I cautioned investors to fasten their seat belts, as the stock had nothing attractive to offer in 2019. But six months into the year, I was singing a different tune.
My July article predicted that a breakout is on the horizon and that the flag carrier of Canada will end the year with shockingly high returns. At that time, the price was $40.60 and already a 56.4% gain from the 2018 year-end price.
Heading into the end of September 2019, the TSX releases the first-ever edition of the TSX 30. Air Canada was ranked number seven among the top 30 performing Canadian stocks over the last three years. The company’s three-year return was over 346%.
As of this writing, Air Canada is trading at $49.39, a 90.2% upside year to date. Analysts are predicting that my top pick of 2019 will climb by another 31.6% and hit the $65 mark.
Top pick no. 2
Enbridge (TSX:ENB)(NYSE:ENB) maintains a high position in my books. This $103 billion energy company showed resiliency in the wake of industry headwinds and a gas pipeline accident in Kentucky.
Thus far this year, the gain of the stock has gained 27.7%, with a corresponding dividend of 5.77%. Investors remain loyal to Enbridge because it has a dividend growth streak of 23 years, including a 16.33% dividend growth rate (DGR) over the last five years.
Enbridge is one of the select stocks in the energy sector that you can buy and hold. Apart from being the global energy infrastructure leader, its regulated business is low risk.
The business also has limited commodity price exposure, not to mention a client base that includes companies with strong credit profiles.
The company sees a cash flow growth of 5% to 7% down the road. I tend to agree with analysts who are forecasting the stock price to appreciate by 27.6% in the coming months.
Top pick no. 3
The inverted yield curve sounded alarm bells in 2019 that recession fears heightened among investors. If I were to protect my investment, I would seek the safety of utility stocks, particularly Fortis (TSX:FTS)(NYSE:FTS).
This $25 billion regulated electric company is a recession-resistant stock. Had you invested $10,000 at the start of the millennium, the stock would have delivered a total return of 1,137.31% — and your money would be worth $123,741.34 today.
While Fortis is not a high-flyer, it’s a steady performer. The stock is up 21.5% year to date, although it went through ups and downs during the year. I wouldn’t mind paying a premium for as long as it protects my money and delivers a steady income stream.
If you need to take a defensive position in 2020, Fortis remains a safe investment. The company derives nearly 100% from regulated operations and you can expect cash flows to be stable even in a bear market.
Top prospects in 2020
I will end this piece by saying that Air Canada, Enbridge, and Fortis are also my top investment choices in 2020.