The economic expansion amid ongoing vaccination provides a solid base for growth in equities. As economic activities begin to gain pace, I expect consumer demand to revive and drive Canadian stocks higher. With the improving economic environment, let’s look into five such top TSX stocks that could deliver superior returns. Moreover, these stocks are trading under $50.
Real Matters
Real Matters (TSX: REAL) stock is looking attractively priced at the current price levels. It has declined over 40% despite the favorable operating environment. A lower interest rate environment and a strong U.S. mortgage market provide a strong base for growth. Meanwhile, the sharp pullback in its stock presents an excellent buying opportunity for long-term investors.
I expect the interest rates could continue to trend lower for an extended period, providing a strong growth catalyst. Meanwhile, Real Matters’ strong blue-chip customer base and a large addressable market augur well for growth. Refinancing volumes are expected to remain elevated, driving its revenues and earnings.
Suncor Energy
Suncor Energy (TSX: SU)(NYSE: SU) stock increased about 28% in three months on increased economic activities and hopes of a recovery in demand. I believe higher production and an increase in oil prices could drive Suncor Energy’s revenues and earnings, in turn, its stock.
Improving energy demand and Suncor’s low-cost base are expected to support its margins and dividend payments. Despite the recent buying, Suncor stock continues to trade cheap, providing a good buying opportunity for long-term investors. Also, it offers a healthy annual yield of 3.2%.
Algonquin Power & Utilities
Algonquin Power & Utilities (TSX: AQN)(NYSE: AQN) has delivered strong returns over the past several years. Besides, it has boosted its shareholders’ returns through higher dividend payments. It generates strong earnings and cash flows that are backed by its high-quality rate-regulated asset base. Further, strategic acquisitions are likely to bolster its growth rate.
The utility company expects its rate base to increase at an average annual growth rate of 11% through 2025, which is likely to drive its earnings and future dividends. Algonquin Power & Utilities has announced a 10% hike in its dividend for 2021 and offers a yield of 4.1%.
Goodfood Market
The demand for online grocery services is expected to remain elevated, driving Goodfood Market (TSX: FOOD) stock higher. Goodfood Market has delivered strong financial performance over the past several quarters, reflecting its growing customer base and increased demand.
I expect Goodfood Market’s active customer base to continue to increase at a high double-digit rate in the coming quarters. Moreover, its strong delivery capabilities growing footprint are expected to drive its revenues and margins, in turn, its stock.
Absolute Software
Absolute Software (TSX: ABST)(NASDAQ: ABST) has delivered stellar returns in the past and significantly outperformed the broader markets. Moreover, I expect the momentum in Absolute Software stock to continue, reflecting higher spending on cybersecurity threats. Thanks to the sustained demand, its annual recurring revenue remains strong, providing increased visibility for future growth.
Moreover, its large customer base, high retention rate, and strong balance sheet bode well for growth. Also, its expansion in developing regions and up-selling opportunities are expected to drive its revenues and adjusted EBITDA. Meanwhile, Absolute Software stock trades at a lower valuation compared to its peers.
