The expected recovery in demand, economic expansion, and widespread vaccination is likely to drive equities in 2021. With recovery and growth in the background, I have selected the five of the best TSX-listed stocks to buy now that could deliver stellar returns in 2021. Moreover, these Canadian stocks are trading under $50, suggesting you can start investing even with smaller amounts.
Suncor Energy
Suncor Energy (TSX: SU)(NYSE: SU) remains one of my top recovery bets for 2021. The stock witnessed strong buying over the past three months. However, it is still down by over 42% in one year, suggesting further upside in its stock. The economic reopening and development of the vaccine have led to a sharp recovery in crude prices, which is now trading near the prior year’s levels.
I believe the demand for crude oil is expected to improve in 2021, while its price is expected to trend higher, providing a strong growth base for Suncor Energy. Besides the recovery in demand and improved commodity prices, Suncor Energy stock is likely to benefit from its lower cost base. Moreover, its investments in midstream opportunities are likely to expand its market reach and strengthen its sales channels. Also, investors could gain from its decent dividend yield of 3.8%.
Dye & Durham
Dye & Durham (TSX: DND) is expected to deliver exceptional returns in 2021 on the back of its strong financial and operational performance. The company’s accretive acquisitions and sustained momentum in the base business are likely to drive double-digit growth in its revenues and adjusted EBITDA. Moreover, increased economic activities could drive demand for its products and services.
Dye & Durham announced three acquisitions since December 2020, which is expected to expand its geographic reach, add new clients, and accelerate its revenues and EBITDA. Besides opportunistic acquisitions, Dye & Durham is expected to gain from its diverse and active client base of over 25,000. Its long-term contracts with top clients, up-selling, and high customer retention rate augur well for growth.
Algonquin Power & Utilities
Algonquin Power & Utilities (TSX: AQN)(NYSE: AQN) has been a consistent performer and is likely to deliver strong returns in 2021 as well. The company is likely to boost its shareholders’ returns through higher dividend payments.
Algonquin Power & Utilities is expected to benefit from continued rate base growth, which is likely to drive its high-quality earnings base. Meanwhile, strategic acquisitions and momentum in the renewable power business are likely to support its growth. Algonquin Power & Utilities projects double-digit growth in its EBITDA. Meanwhile, the utility company’s EPS is likely to increase at a high single-digit rate in 2021, suggesting that it could continue to hike its dividend at a decent pace. Currently, it offers a healthy yield of 3.6%.
Goodfood Market
Online grocery company Goodfood Market (TSX: FOOD) is expected to deliver strong returns in 2021 on the back of increased demand for its services and its growing digital capabilities. The demand for online grocery services is likely to stay elevated. Meanwhile, spending on e-commerce is likely to increase, providing a strong underpinning for growth.
Its strong and growing active subscriber base, last-mile delivery capabilities, same-day delivery services, and expanded product offerings bode well for growth and are likely to drive its market share and its stock in 2021.
Enbridge
Enbridge (TSX: ENB)(NYSE: ENB) is expected to benefit from the recovery in its mainline throughput volumes in 2021. Moreover, continued growth in its core business and strong momentum in the gas and renewable power businesses could further support its growth in 2021.
Besides capital appreciation, investors are expected to gain big from its high dividend yield. The Dividend Aristocrat currently offers a high yield of over 7.4%, which is safe. Moreover, its dividend is likely to increase at a decent pace, reflecting diversified cash flows and contractual arrangements.
