Given the multiple rollouts of vaccine, historically low interest rates, and the expectation of more stimulus packages, the Canadian equity markets continued the bull run, with the S&P/TSX Composite Index hitting a new all-time high last week. Meanwhile, the rising COVID-19 infections and a slowdown in the economic recovery rate could create headwinds for the equity markets.
Despite the uncertain outlook, I believe the following three stocks will outperform the equity markets this year, given their high growth prospects.
Amid the concerns over rising pollution levels, renewable energy investments have been increasing over the last few years. Meanwhile, Frost & Sullivan projected that renewable energy investment will reach US$3.4 trillion by 2030, with US$2.72 trillion in solar and wind energy. Amid the rising interest in renewable energy, I have chosen Northland Power (TSX:NPI) as my first pick.
The company, which owns and operates clean and green global power infrastructures globally, has returned 122.7% over the last two years. This year, its stock price has risen by 5.8%. Meanwhile, the upward momentum in Northland Power’s stock price could continue, given its extensive pipeline of projects and the strong growth prospects that the sector offers.
Northland Power currently operates 2.6 gigawatts of power assets globally. Further, the company has 1.5 gigawatts of power assets under construction or in the advanced development stage. These assets include three onshore wind projects in New York, which the company acquired in the September-ending quarter. The three projects could become operational in 2022. Further, they could also act as a launchpad to expand its business in the United States.
Along with these growth prospects, Joe Biden’s victory in the United States presidential election makes me bullish on the stock.
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Amid the automotive sector’s weakness, BlackBerry (TSX:BB)(NYSE:BB) delivered a subdued performance last year. However, the company’s growth prospects look promising. It has collaborated with Amazon to develop and market its Intelligent Vehicle Data Platform, named IVY. The platform would help automakers securely access vehicle data and generate predictive insights and inference by applying machine learning, which would help in offering highly personalized in-vehicle experiences. The company hopes to implement this software in 2023 model vehicles.
Further, BlackBerry is also focusing on capitalizing on electric vehicle market growth. It has already secured design wins with 19 electric vehicle OEMs (original equipment manufacturers), which had a significant market share of 61% in the first half of 2020.
Meanwhile, the company is also focusing on strengthening its position in cybersecurity and endpoint management solutions. Its Spark Suite and Cyber Suite platforms have helped the company in expanding its customer base. So, given its high-growth prospects, I expect the company to deliver superior returns this year.
With Democrats taking control of both House and Senate, the interest in cannabis stocks has reignited, as pro-cannabis bills, such as the SAFE Banking Act and the MORE Act, could get passed easily. The Safe Banking Act’s approval could allow financial institutions to do business with cannabis companies, thus allowing cannabis companies access to the much-needed capital at a cheaper rate.
Further, five more states in the United States legalized their cannabis programs in November, which has expanded the United States’s cannabis market. So, amid the renewed interest in cannabis stocks, I have chosen Canopy Growth (TSX:WEED)(NYSE:CGC) as my third pick.
With the United States, Canada, and Germany accounting for 90% of the cannabis global addressable market, Canopy Growth focuses on these three markets. It is working on improving the quality of its value products, expanding its Cannabis 2.0 portfolio, and increasing its retail presence to raise its market share.
With liquidity of $1.72 billion, the company is well positioned to fund its growth initiatives. Further, it has taken several cost-cutting initiatives, such as the closure of production facilities and cutting down on its workforce, to move towards profitability. Canopy Growth’s management expects to post positive EBITDA in fiscal 2022.
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. David Gardner owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends BlackBerry and BlackBerry and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.