4 Top Canadian Stocks to Buy Right Now for Superior Returns

These four Canadian stocks could beat the broader equity markets this year, given their high-growth prospects and a favorable environment.

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The optimism over the expansion of vaccination programs, the improvement in the economic recovery rate, and the expectation of more fiscal stimulus are driving Canadian equity markets higher. On Thursday, the S&P/TSX Composite Index hit a new all-time high. Amid increased investors’ confidence, here are the four top Canadian stocks you can buy right now for superior returns.

Suncor Energy

Oil prices have been rallying of late due to the expectation of life returning to pre-pandemic ways and the pledge by OPEC+ countries to clear the surplus oil. Meanwhile, Suncor Energy (TSX:SU)NYSE:SU), with its integrated business model, is well positioned to benefit from higher oil prices.

Also, Suncor Energy is focusing on improving its operating metrics. The management expects its production to increase around 10% this year following its maintenance activities, while its operating expenses could fall approximately 8%. Further, the company’s refinery utilization rate could rise to 96%. So, the improvement in its operating metrics and higher oil prices could drive its financials and stock price this year.

Suncor Energy’s valuation also looks attractive, with its forward price-to-sales and price-to-book multiples standing at 0.9 and 0.7, respectively. It also pays quarterly dividends of $0.21 per share, representing a forward dividend yield of 3.8%.

Canopy Growth

With cannabis stocks witnessing strong buying since November last year, I have chosen Canopy Growth (TSX:WEED)(NYSE:CGC) as my second pick. It is expanding its Cannabis 2.0 product offerings, increasing its value products’ THC content, and increasing its retail presence to drive its sales in Canada.

Meanwhile, the U.S. cannabis market offers strong growth prospects amid the expansion in the addressable market due to increased legalization. The company owns warrants to acquire Acreage Holdings, a multi-state operator in the U.S., within 60 days after the legalization of cannabis by the federal government. It also owns a significant stake in BioSteel Sports Nutrition, which produces sports nutrition products.

Canopy Growth has also partnered with Martha Stewart to launch a portfolio of health and wellness CBD products for humans and pets. So, the company’s growth prospects look healthy.

Lightspeed POS

Yesterday, Lightspeed POS (TSX:LSPD)(NYSE:LSPD) reported its third-quarter earnings. The company’s revenue grew 79% on a year-over-year basis to US$57.6 million, driven by 85% growth in its recurring software and payments revenue and acquisition of ShopKeep and Upserve. Its customer base grew 74% to 115,000 locations. Its gross transaction value also increased by 48% to US$9.1 billion.

Meanwhile, the acquisition of ShopKeep and Upserve has strengthened the company’s position in small to medium-sized businesses in some major markets of the U.S. The company had also launched Supplier Network in January, which allows retailers to connect with suppliers directly.

Further, the company closed the quarter with cash and cash equivalents of US$232.6 million, which allows the company to carry out its future acquisitions. Given the secular shift towards online shopping and its growth initiatives, I expect the upward momentum in LightSpeed’s stock price to continue.

Algonquin Power & Utilities 

My final pick would be Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN), which runs diversified utility businesses and power generating facilities from renewable resources. The company’s low-risk utility assets provide stability to its financials, while its power generating facilities offer high-growth prospects amid increased interest in renewable energy.

The company plans to invest $9.4 billion over the next five years, including $6.3 billion in regulated utility assets and the remaining $3.1 billion in renewable energy assets. These investments would increase the company’s rate base at a CAGR of 11.2% from 2020 to 2025, driving Algonquin’s adjusted EPS at a compound annual growth rate (CAGR) of 8-10%. Further, the company also pays quarterly dividends of $0.2019 per share, representing a forward dividend yield of 3.6%.

So, given its strong growth prospects, substantial cash flows, and healthy dividend yield, I am bullish on Algonquin Power & Utilities.

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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