3 Top Canadian Stocks to Buy Ahead of Their Earnings

These three Canadian stocks could deliver strong quarterly performance.

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The Canadian equity markets have started this month on a positive note, with the S&P/TSX Composite Index rising over 2%. The expansion of vaccination programs and the new stimulus package’s progress in the U.S. appear to have increased investors’ confidence, driving the equity markets higher. Amid improving investors’ sentiments, here are the three Canadian stocks you can buy ahead of their earnings.

Suncor Energy

Suncor Energy (TSX:SU)(NYSE:SU) will report its fourth-quarter earnings after the market closes on February 3. During its third-quarter earnings, the company’s management had announced that it had completed its maintenance activities by early November, and all its operating activities had returned to their standard operational rates. Its refineries had also returned to their full capacity after the planned maintenance. So, the company’s production rate could increase.

Along with increased production, the improvement in crude oil prices could boost Suncor Energy’s top line during the fourth quarter. Further, the company’s management has taken several initiatives to lower its operating and capital expenses, which could improve its margins during the quarter. Additionally, its management has set an optimistic 2021 outlook, with its production expected to rise by 10%, while its expenses could decline by 8%.

Amid the expectation of improvement in its operating metrics, I am bullish on Suncor Energy. Analysts also look bullish on the stock. Of the 25 analysts, 19 analysts have given a “buy” rating, while the remaining six have issued a “hold” rating. None of the analysts have given a “hold” rating. The consensus price target stands at $29.91, representing a 12-month return potential of 38.8%.

Lightspeed POS

Last year belonged to Lightspeed POS (TSX:LSPD)(NYSE:LSPD), with its stock price rising close to 150%. The increased adoption of omnichannel solutions amid the pandemic-infused lockdown led to an increased demand for Lightspeed’s services. Meanwhile, the structural shift towards online shopping has established long-term growth potential for the company.

Lightspeed will report its third-quarter earnings of fiscal 2021 before the market opens on February 4. For the quarter, the company’s management expects its revenue to come in the range of $44 million to $47 million, while its adjusted EBITDA losses to be around $8 million to $10 million. The guidance represents year-over-year growth of up to 45%. Along with organic growth, the company’s acquisition in the previous four quarters could drive its financials. Given its recent performance, I expect the company to outperform its guidance.

Canopy Growth

The optimism in the cannabis space amid the expansion of addressable market and Democrats taking control of both Senate and House have driven Canopy Growth’s (TSX:WEED)(NYSE:CGC) stock price by 64.1% this year. Meanwhile, the company will report its third-quarter results on February 9, which could determine the future course of its stock price.

For the quarter, analysts project the company to report $150.1 million of revenue, representing year-over-year growth of 21.3% and sequential growth of 11%. The expansion of its product offerings, improved quality of its value products, and higher retail store openings in Canada’s vital provincial markets could drive its sales.

Further, amid its several cost-cutting initiatives, such as closing down its excess production facilities and cutting down its headcount, Canopy Growth could improve its adjusted EBITDA in the third quarter. Analysts expect the company’s adjusted EBITDA losses to be $73.8 million compared to $138.5 million in the previous year’s quarter. So, I believe the company is on track to achieve its target of reporting positive adjusted 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.

The Motley Fool owns shares of Lightspeed POS Inc. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

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