TSX stocks have been on an absolute roller coaster in 2020. Through the ups and downs, a select group of top stocks have significantly out-performed the S&P/TSX Composite Index. Many of these companies are proving that they have the capacity to survive and thrive during the pandemic crisis.
Here are two top stocks that are vastly beating the TSX today — stocks that are definitely worth keeping on your radar!
This TSX stock wins from grocery e-commerce
Goodfood Market (TSX:FOOD) has been on a tear in 2020. Year to date, the stock is up almost 50%, versus the TSX Index, which is down around -13%.
There’s a reason for Goodfood’s recent strength. In March, Goodfood saw a massive uptick in demand for online groceries and meal kits.
It released second-quarter results in April and saw year over year revenue growth of 61% and gross profit margins increase to 30% (up 9.4 percentage points). While the company is still not profitable, it has been heavily investing to keep up with demand growth.
Goodfood is meeting demand for online-groceries
This TSX stock is attractive for a number of reasons. First, Goodfood has seen demand skyrocket because of the pandemic. People are looking for healthy food options without having to leave their homes. As a result, a whole new wave of customers is trying Goodfood’s products and becoming long-term subscribers.
Second, Goodfood now has operational scale across Canada. It recently added two new distribution centres in Vancouver and Toronto. This establishes broader economies of scale that will help fuel future growth and operational efficiencies. As a result, profitability could be closer than it seems.
Finally, Goodfood is building a strong portfolio of private-label grocery products, establishing the early foundations to become a major online grocery competitor in Canada. Consumers are increasingly moving toward e-commerce, even for groceries. Goodfood is establishing the framework to benefit from this trend for a long time to come.
This TSX stock wins from health and wellness
Another stock that is outperforming the TSX is Jamieson Wellness (TSX:JWEL). The stock is up over 30% year-to-date. During the March market crash, Jamieson hardly lost any price momentum, which was encouraging. Jamieson is a very solid company, with strong consumer tailwinds behind it.
Jamieson is Canada’s number one vitamin and health-supplement brand. Over the past few years it has been rapidly expanding its product mix, and distribution range, which has started to pay off in a big way.
Management announced strong second-quarter results, yesterday. Revenues, adjusted EBITDA, and net income grew year over year, respectively, by 16.5%, 15.2%, and 20.6%. Domestic sales saw a 22% spike up, and international sales increased by 51%.
Management affirmed a strong outlook for the year. It expects 2020 net revenue growth of 5.5% to 9% and adjusted EBITDA growth of 6.5% to 11%.
Jamieson is helping society stay healthy
There are a few reasons why this TSX stock is so attractive. First, demand for vitamins and immune-boosting supplements is incredibly strong right now. Jamieson’s products are some of the best quality and best known, so it has a great opportunity to capture domestic and international market share.
Second, Jamieson has been expanding its e-commerce sales platforms in the U.S. It is also gaining strong traction in China. Both of those are massively under-penetrated markets and many times larger than Canada. Expansion into these markets should provide a significant pipeline of expansion ahead.
Finally, despite the massive uptick in demand, Jamieson doesn’t foresee any major supply disruptions or issues in 2020. The company will face some margin pressure, as costs from COVID-19 are higher than normal, but this should be more than made up in stronger than average volumes.
Overall, this is a very well-managed company with strong long-term tailwinds. While it’s not cheap at 42 times earnings, buy on any weakness. I think the outperformance easily continues through the year.
Looking for a stock to outperform the TSX over the long-run? Check these out.
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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 Robin Brown owns shares of JAMIESON WELLNESS INC. The Motley Fool recommends Goodfood Market.