4 Canadian Value Stocks to Buy Right Now for Superior Returns

Amid improving economic activities, these four Canadian stocks are well positioned to deliver superior returns.

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The rising bond yields are pointing towards faster-than-expected economic recovery. So, investors are looking at rotating their portfolios by replacing high-growth tech stocks with value stocks. Amid the renewed interest in values stocks, here are four stocks that you could buy right now for superior returns.

Suncor Energy

The oil prices have rebounded strongly amid the improvement in economic activities, and OPEC announced that it will not increase its production levels until April. Higher oil prices would benefit oil-producing companies, such as Suncor Energy (TSX:SU)(NYSE:SU), which is up 29.5% for this year. However, the uptrend could continue amid the expectation of oil prices remaining at elevated levels for the rest of this year, improvement in operating metrics, and attractive valuation.

Suncor Energy’s management expects its production and refinery utilization rate to increase this year, while its production expenses could fall. The company’s valuation also looks attractive, with its price-to-book multiple standing at 1.2. The company also pays quarterly dividends at a healthy yield of 3%.

Enbridge

Amid the weak oil demand due to the pandemic, the throughput of Enbridge’s (TSX:ENB)(NYSE:ENB) liquid mainline system declined, weighing heavily on its financials and stock price. However, with the improvement in oil demand, its asset utilization rate could improve, driving its financials. Further, the company is continuing with its $16 billion diversified secured growth capital programs, which could increase its adjusted EBITDA by $2 billion from 2023. So, the company’s growth prospects look healthy.

Amid the improvement in oil prices, Enbridge’s stock price has increased by over 10% for this year. However, its valuation still looks attractive, with its price-to-book and forward price-to-earnings multiples standing at 1.7  and 17.1, respectively. The company has also raised its 2021 dividends by 3% to $3.34 per share, representing a dividend yield of 7.4%. Given its growth prospects, attractive valuation, and high dividend yield, I am bullish on Enbridge.

Waste Connections

Due to the slowdown in economic activities amid the pandemic-infused restrictions, Waste Connections’s (TSX:WCN)(NYSE:WCN) revenue from the solid waste commercial collection, transfer, and disposal declined during 2020. Further, its operating expenses also increased, as the company provided supplemental pay to its frontline workers. All these factors weighed on the company’s financials and stock price.

However, amid the improvement in economic activities, Waste Connections’s management has provided a promising 2021 guidance. The management expects its top line and adjusted EBITDA to increase by 6.5% and 8.3%, respectively. Its adjusted EBITDA margin also could improve. The company also pays quarterly dividends, with its yield currently standing at 0.6%.

Restaurant Brands International

The pandemic had forced many food-service companies to close their dine-in services or operate with limited capacity, which weighed on their financials. However, Restaurant Brands International (TSX:QSR)(NYSE:QSR) fared better than its peers due to its highly franchised business model.

Further, the company has been investing in expanding its off-premise channels, which has partially mitigated the impact of weak dine-in sales amid restrictions. The company’s digital sales reached $6 billion in 2020, while more than doubling in Canada. Meanwhile, these investments could drive the company’s sales in the post-pandemic world as well. So, the company is well positioned to deliver superior returns over the next two years.

Restaurant Brands International also rewards its shareholders with quarterly dividends. Currently, it pays quarterly dividends to $0.53 per share, at a forward yield of 3.3%. Its valuation also looks reasonably attractive, with a forward price-to-earnings multiple of 23.9.

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.

The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends RESTAURANT BRANDS INTERNATIONAL INC. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

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