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

These three Canadian stocks could deliver superior returns, given their high-growth prospects and a favourable environment.

| More on:
Dollar symbol and Canadian flag on keyboard

Image source: Getty Images

Although the Canadian equity markets have recovered strongly from their March lows, the upward momentum could continue amid the expectation of recovery in the demand and economic expansion. So, if you have $3,000 to invest right now, you can consider these three Canadian stocks for higher returns.

Aurora Cannabis

Although Aurora Cannabis (TSX:ACB)(NYSE:ACB) failed to meet analysts’ expectations in its recently announced second-quarter earnings, the company managed to bring its adjusted EBITDA losses and cash burn down. Along with higher revenues, its cost-cutting measures, such as closing-down excess production facilities, lowering its headcount, and reducing its SG&A expenses, have helped the company in bringing its adjusted EBITDA losses to $12.1 million from $53.1 million. So, I believe the company is on track to report positive EBITDA soon.

Aurora Cannabis has also strengthened its position in the Canadian and international medical cannabis markets through its infrastructure, regulatory experience, and compliance systems. In the United States, its CBD brand Reliva has acquired a significant market share. Meanwhile, the company’s management hopes that its experience in the CBD business could help in expanding its THC business once the federal government legalizes cannabis. So, given its high-growth prospects and improving margin, I believe Aurora Cannabis could deliver superior returns this year.

Suncor Energy

Amid supply cuts and hopes of more U.S. economic stimulus, the West Texas Intermediate (WTI) oil rose above US$60 per barrel. Higher oil prices could benefit oil-producing companies, such as Suncor Energy (TSX:SU)(NYSE:SU). Thanks to its long-life, low-decline assets, the company could sustain its operations and pay dividends, provided WTI crude trades around US$35 per barrel. So, with the WTI crude trading well above that level, the company’s margins could improve in the coming quarters.

Suncor Energy’s management expects its operating metrics to improve in 2021. Following the maintenance activities in 2020, the company’s production could increase by 10%. Meanwhile, its operating expenses could fall around 8% due to its various cost-cutting initiatives. Further, the company’s refinery utilization could improve to 93%. So, with the improving operating metrics and higher oil prices, Suncor Energy’s financials could improve, driving its stock prices higher. The company also pays quarterly dividends of $0.21 per share at a dividend yield of 3.5%.

Northland Power

Amid the increased interest in renewable energy space, I have selected Northland Power (TSX:NPI) as my third pick. The company currently operates 2.6 gigawatts of power-generating facilities, while 130 megawatts of additional facilities under construction and 2.67 gigawatts of power generating capacity in advanced development.

The offshore wind power business is Northland Power’s largest business segment, generating around 60% of its adjusted EBITDA. Last month, it signed an agreement with PKN Orlen to acquire a 49% stake in its Baltic Power projects that generate 1.2 gigawatts of power. In the third quarter, Northland Power had acquired three onshore developmental wind projects in New York, which could provide the company an entry into the attractive U.S. green energy market.

Meanwhile, the company is also expanding its footprint in Asia by advancing its projects in Taiwan, Japan, and South Korea, which could increase its production capacity by 2.6 gigawatts. The company has also planned to increase its utility business’s contribution to its adjusted EBITDA from currently 7% to above 10% to provide stability to its financials. So, given its growth prospects, Northland Power provides an attractive buying opportunity.

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.

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

More on Investing