The lower interest rates, economic recovery, and revival of consumer demand provide a strong base for growth in 2021. With that in the background, let’s dive into five under-$30 stocks that are likely to deliver superior returns.
Algonquin Power & Utilities
Shares of Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) have consistently delivered healthy returns over the past decade. Moreover, I expect the uptrend in its stock to sustain, thanks to its high-quality earnings, rate base growth, and opportunistic acquisitions.
It expects its rate base to grow at a CAGR (compound annual growth rate) of about 11% in the next five years, which is likely to drive its adjusted EBITDA and earnings and, in turn, support its higher dividend payments. On average, Algonquin Power & Utilities has raised its dividends by about 10% in the last 10 years. Further, it announced a 10% hike in its annual dividends for 2021. Thanks to its low-risk and high-quality asset base, Algonquin Power & Utilities offers capital appreciation and consistent dividend income.
Further, Kinross Gold’s production volumes are expected to increase over the next three years. Meanwhile, its production cost is likely to decline during the same period, which is likely to support its margins and bottom line. Further, Kinross Gold’s superior exposure to gold and strong balance sheet augurs well for growth. The company has restarted to pay dividends and offers a yield of 1.8%.
I expect Absolute Software (TSX:ABST)(NASDAQ:ABST) stock to outperform the broader markets in the coming years. Higher spending on cybersecurity is likely to drive demand for its products and services and drive its stock higher. Meanwhile, its forward EV/sales multiple of 5.2 is lower than its peers, making it attractive on the valuation front.
Absolute Software’s growing total annual recurring revenue, new customer additions, strength in international business, zero-debt balance sheet, and cross-selling opportunities bode well for future growth.
AltaGas (TSX:ALA) owns low-risk and high-growth regulated utility and midstream assets. Its rate-regulated business continues to deliver predictable and growing cash flows that support its dividend payments. Meanwhile, its midstream operations are growing at a healthy pace.
The company’s rate base growth and cost-reduction initiatives are likely to drive its adjusted EBITDA and earnings in the coming years. Meanwhile, higher export volumes are likely to drive its midstream operations. AltaGas pays monthly dividends and offers a high dividend yield of 5%.
Goodfood Market (TSX:FOOD) stock has delivered outsized growth over the past three years. Moreover, I expect the uptrend in its stock to continue thanks to the increased demand for online grocery services. Goodfood Market’s customer base is growing rapidly, which augurs well for growth.
I believe the increased demand for online grocery, its strong delivery capabilities, and same-day delivery options position it well to continue to increase its revenues at a strong double-digit rate. Meanwhile, its targeted marketing campaigns and growing footprint could drive basket size and, in turn, support its margins.
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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. The Motley Fool recommends ALTAGAS LTD. and Goodfood Market.