The Motley Fool

2 Top Canadian Stocks Ready for Sky-High Returns in 2021

Image source: Getty Images

We saw plenty of high-flying tech stocks soar past the Canadian market’s 3% return last year. Even though a global pandemic was present for most of 2020, we still saw many top companies impressively grow their market share. 

Now, in 2021, I’d say there’s a good chance that we’ll see plenty of top Canadian stocks continue to stay hot. As vaccines continue to be distributed, we could experience a stock market rally, as the country slowly re-opens throughout the year.

I’ve you’re looking for market-beating growth, there’s no shortage of choices on the TSX. I’ve covered two top Canadian stocks that you’ll seriously want to consider adding to your portfolio this year if you’re looking to outperform the market.

Canadian stock #1: Dye & Durham

Dye & Durham (TSX:DND) has been a public company for less than a year, but shares are already up nearly 200%. In 2020 alone, the company surged just shy of 250%. That’s not too bad considering the Canadian market was barely positive.

Shares of the $3 billion company are trading at a rare discount today. Since joining the TSX in July 2020, the stock has done nothing but go up.

Year to date, though, shares are trading down about 10%. If you were looking to add this high-flying growth stock to your portfolio, now is an opportunistic time to do so.

At a price-to-sales (P/S) ratio above 30, even at a discounted price, shares of Dye & Durham are far from cheap. That’s the price investors will need to pay if they’re looking to own a Canadian stock that’s grown 200% in less than a year.

I wouldn’t bank on Dye & Durham to have a repeat performance in 2021. Annual growth of 200% is not exactly sustainable. But if you’re a long-term investor with at least a five-year holding period, this is one Canadian stock that I could see not only soar in 2021 but continue to crush the market over the next five years. 

Canadian stock #2: Absolute Software

Next on my list of high-flying tech stocks is Absolute Software (TSX:ABST)(NASDAQ:ABST). 

The $1 billion tech company might not be able to match the growth of the much-younger Dye & Durham, but shares are trading at a much more reasonable price. 

In 2020, shares of Absolute Software were up nearly 70%. Over the past five years, growth is now nearing 200%. 

Absolute Software may be trading at an all-time high today, but I don’t think investors should be waiting for a dip in price to pick up shares. If that’s your plan, you may be waiting for a while.

The attractive valuation of this Canadian stock is what has me ready to pick up shares today. In comparison to some of its peers, Absolute Software is extremely undervalued. The company trades today at a P/S ratio below 10. 

That kind of valuation may not be getting any value investors on board, but for growth investors looking for a relatively inexpensive stock, this is one company you’ll want to have on your radar. 

Foolish bottom line

If you’re looking for a high-flying growth stock that can drive market-beating returns, you’re going to need to pay up. Both the Canadian stocks I’ve covered are far from cheap, but each of the company’s track records speaks for itself.   

If you can stomach the volatility and have a time horizon of at least five years, these are two Canadian stocks that are in a prime position to see market-beating growth continue this year.

Looking for more top stock ideas? Be sure to check out this list of 10 picks from our professional investing team!

The 10 Best Stocks to Buy This Month

Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy TODAY. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you.
Because Motley Fool Canada is offering a full 65% off the list price of their top stock-picking service, plus a complete membership fee back guarantee on what you pay for the service. Simply click here to discover how you can take advantage of this.

Click Here to Learn More Today!

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 Nicholas Dobroruka has no position in any of the stocks mentioned.

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.