The Motley Fool

3 Best TSX Stocks for Sky-High Returns in 2021

Image source: Getty Images

Equities have delivered sky-high returns in the past several months, reflecting strong buying and improving economic outlook. Thanks to the recent run-up in stocks, most of the Canadian stocks are appearing overvalued. While valuations look a bit stretched, a few TSX-listed stocks have the potential to deliver stellar returns in 2021 as well. 

Here are three such TSX stocks that are likely to outperform the broader markets by a significant margin and deliver robust returns. 

goeasy

goeasy (TSX:GSY) is one of my top stock picks for 2021. The sub-prime lender has a history of consistently delivering outsized returns. Its stock has appreciated by 258% in three years. Meanwhile, it is up about 22% so far in 2021. Moreover, it has boosted its shareholders’ returns through higher dividend payments. goeasy has been paying dividends for the last 17 years, while its dividends have grown at a compound annual growth rate of 34% in seven years. 

Its revenues increased by 7% in 2020. Meanwhile, its adjusted EPS increased by 46% year-over-year, which is encouraging. 

I believe a large addressable market, growth in loan portfolio, strong credit performance, and lower loan protection insurance claims are likely to drive goeasy’s revenues and earnings, in turn, its stock. goeasy projects double-digit growth in its revenues over the next three years. Moreover, its bottom line could continue to rise at a breakneck pace, driving its dividends.

5 Stocks Under $49 (FREE REPORT)

Click here to gain access!

Dye & Durham

Dye & Durham (TSX:DND) is another high-growth company that I believe could continue to deliver outsized returns in 2021. Its revenues and adjusted EBITDA are growing at an astounding pace, in turn, are driving its stock higher. Continued strength in its base business and its accretive acquisitions are driving its top line, in turn, its EBITDA. 

In the most recent quarter, Dye & Durham’s revenues and adjusted EBITDA soared by about 96%. I expect the momentum to sustain in 2021, which is likely to push Dye & Durham stock higher. Its revenues are likely to increase at a strong double-digit rate. Meanwhile, its adjusted EBITDA is projected to increase by 75% in Q3.

Dye & Durham’s strong customer base, geographic expansion, and recent acquisitions are likely to bolster its growth in the coming years. 

Shopify 

The uptrend in Shopify (TSX:SHOP)(NYSE:SHOP) stock could continue in 2021, thanks to the favourable industry tailwinds. Shopify is benefitting from the structural shift towards a multichannel platform. Shopify’s revenues soared 86% in 2020. Meanwhile, its gross merchandise volume (GMV) jumped 96%. Thanks to the robust demand for its platform and operating leverage, Shopify reported adjusted EPS of $3.98 a share compared to $0.30 in 2019. 

I believe the expansion of the fulfillment network, growing adoption of its retail POS offerings, and the ongoing shift towards the e-commerce platform is likely to drive its financials, in turn, its stock in 2021. 

Compared to 2020, Shopify’s GMV growth could moderate a bit in 2021. However, the momentum in its merchant services and subscription solutions business is likely to sustain and drive its revenues. Its payments, shipping, and capital offerings are likely to support its sales. 

Increased spending on e-commerce, higher demand, and Shopify’s dominant positioning bode well for future growth. 

But before you invest in Shopify, take a look at this free report now for under $50 value stocks...

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

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 Sneha Nahata has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify and Shopify.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.