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Buy These 4 Canadian Stocks for Superior Returns in 2021

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The strong buying amid expectation of recovery in demand has led the Canadian equity markets to rally, with the S&P/TSX Composite Index up 5.5% for this year. The announcement of the extension of pandemic benefits by the Canadian government on Friday further boosted investors’ confidence. Amid the increased investors’ optimism, here are the four Canadian stocks you could buy to earn superior returns.

Magna International

On Friday, Magna International (TSX:MG)(NYSE:MGA) reported an impressive fourth-quarter performance, outperforming analysts’ top-line and bottom-line expectations. Year-over-year, the company’s sales increased by 12.5%, while its adjusted EPS more than doubled.

The company generated US$2.3 billion of cash from its operations compared to US$1.7 billion in the corresponding quarter of the previous year. It also increased its dividends by 7.5% to US$0.43 per share, representing a dividend yield of 2.1%. Further, the company’s management has also set an optimistic outlook, with its sales projected to rise by 27% in 2021, while its adjusted EBIT margin could expand over 2%.

Meanwhile, Magna International had announced in December of forming a joint venture with LG Electronics that produces e-motors, inverters, and onboard chargers used in EVs. Meanwhile, it could also benefit from the entry of tech giants, such as Apple and Google, into the EV sector. Given its healthy growth prospects, Magna International could deliver superior returns in 2021.

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goeasy (TSX:GSY) has returned close to 30% this year already. Apart from the expectation of economic recovery, the strong fourth-quarter performance has boosted its stock price. The strong credit growth and improvement in repayment drove the company’s financials. Its operating income rose 32%, while its adjusted EPS increased by 55%.

Apart from posting strong fourth-quarter performance, goeasy’s management has provided a bullish outlook for the next three years. Its revenue could rise around 12% every year while delivering a return on equity of over 25%. Despite the increase in its stock price, the company still trades at an attractive valuation.

Its forward price-to-earnings multiple stands at 12.3. So, given the large untapped sub-prime credit market, its bullish outlook, and attractive valuation, goeasy can deliver superior returns this year.

Canopy Growth

Investors’ interest in the cannabis space has increased amid Democrats taking control of both Senate and House and the expansion in cannabis markets due to increased legalization. So, I have selected Canopy Growth (TSX:WEED)(NYSE:CGC), one of the largest cannabis companies in the world, as my third pick.

The company had outperformed analysts’ expectations in its recently announced third-quarter of fiscal 2021. Its management has provided a promising outlook for the next three years, with its revenue projected to grow at a CAGR of 40-50%. The company is yet to become profitable. However, the management hopes to report positive adjusted EBITDA in the second half of fiscal 2022. The company could also report positive operating cash flows in fiscal 2023 and positive free cash flows for fiscal 2024.


BlackBerry (TSX:BB)(NYSE:BB) has corrected sharply after witnessing a sharp rise in its stock price due to speculative buying earlier this month. The company currently trades at $13.75, representing an over 60% fall from its recent highs. I believe the pullback provides an excellent buying opportunity, given its high growth prospects in the automotive and cybersecurity sectors.

BlackBerry’s recent partnerships with Amazon Web Services and Baidu have significantly strengthened its position in the electric vehicle segment. Meanwhile, the company’s cybersecurity and endpoint management platforms, such as Spark Suite and Cyber Suite, have helped the company acquire many blue-chip clients.

With the electric vehicle market projected to deliver double-digit growth over the next few years, BlackBerry could deliver a superior return this year.

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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.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. David Gardner owns shares of Alphabet (A shares), Alphabet (C shares), Amazon, and Apple. Tom Gardner owns shares of Alphabet (A shares) and Alphabet (C shares). The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Apple. The Motley Fool recommends BlackBerry, BlackBerry, and Magna Int’l and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

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