Got $3,000? 3 Top Canadian Stocks to Buy for Superior Returns

These three Canadian stocks could outperform the broader equity markets this year, given their strong growth prospects.

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The Canadian equity markets continue to rise amid the expectation of more fiscal stimulus and improvement in the economic recovery rate. Given the increased investors’ confidence, here are the three top Canadian stocks you can buy right now for higher returns.

Aphria

The cannabis market is expanding amid increased legalization. Last November, five U.S. states legalized some form of cannabis to increase the number of states that have legalized medical cannabis to 36 and recreational cannabis to 15. Further, the power shift towards Democrats has also increased the hopes of cannabis reforms in the United States. Additionally, Canadian provinces have also taken measures to increase retail stores’ rollout, which could drive cannabis sales.

Given the favourable environment, I have chosen Aphria (TSX:APHA)(NASDAQ:APHA) as my first pick. The company has already acquired a significant market share in the Canadian recreational cannabis market amid strong performance from vape and dried flower segments. Meanwhile, the company’s acquisition of SweetWater Brewing Company, which produces craft brewers in the United States, could help the company expand its business in the United States.

Further, the company’s proposed merger with Tilray could create the world’s largest cannabis company based on pro forma revenue. So, I expect the upward momentum in Aphria’s stock price to continue.

Real Matters

Last month, Real Matters (TSX:REAL) reported its first-quarter earnings of fiscal 2021. Its net revenue grew 24.8%, while its adjusted EBITDA rose by 19.7%. The strong growth in the U.S. title and Canada segments drove the company’s financials. The company also launched one new lender in the U.S. appraisal segment and two new lenders in the U.S. title segment.

With economic indicators still weak, the central banks will not increase the interest rate soon. So, low interest rates could provide a tailwind for the company. Further, the company’s management focuses on attaining operational excellence to achieve its 2025 target of doubling its market share in the U.S. appraisal purchase and refinance segments. So, the company’s growth prospects look healthy.

However, amid the recent pullback in the company’s stock price, the company is trading at over 44% discount from its 52-week high, which provides an excellent buying opportunity. Its valuation also looks attractive, with its forward price-to-earnings and forward price-to-sales multiples standing at 21.1 and 2.4, respectively.

Goodfood Market

Goodfood Market (TSX:FOOD) is an online grocery company that delivers fresh meal solutions and grocery items to its members. Amid the pandemic, people shifted towards online shopping, as they were afraid to go out due to health concerns, driving the demand for the company’s services. In its recently reported first quarter of fiscal 2021, Goodfood Market’s revenue grew 62% on a year-over-year basis. The increased subscriber base, expansion of its product offerings, and the introduction of same-day delivery drove the company’s top line.

Its adjusted EBITDA margin improved 8% to 1.5% during the quarter. The improvement in gross margin amid lower incentives and lower marketing expenditure as a percentage of revenues led to the expansion of its EBITDA margin.

Meanwhile, the demand for the company’s services could sustain, given the secular shift towards online shopping and its large subscriber base. The company is also penetrating newer markets to capitalize on the increased adoption of online shopping. It is also investing in expanding its production capacity and broaden its product offerings, which could drive its sales in the coming years.

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 recommends Goodfood Market and Real Matters Inc. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

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