After a rough 2020, the Canadian stock market looks like it’s ready to rebound. Year to date, the S&P/TSX Composite Index is already up 7%. In 2020, that same index was barely positive.
For investors looking to earn market-beating growth, now would be the time to be investing in TSX stocks. The Canadian market may already be at all-time highs, but there’s plenty of optimism in the stock market to keep the bull run going.
Whether you’re looking for growth or steady passive income, I’ve got you covered. Together, the basket of three top TSX stocks that I’ve reviewed have the potential to be long-term winners.
TSX stock #1: Bank of Nova Scotia
The Dividend Aristocrat might not scream market-beating growth, but that’s not the main reason to own a Canadian bank stock.
Passive income and valuation are the two primary reasons I’ve included this TSX stock in my basket of three companies.
The Canadian banks own some of the top dividend yields right now, and Scotiabank is no different. Its annual dividend of $3.60 per share is good enough for a whopping yield of 4.5%.
Another key area that Canadian banks stand out on the TSX right now is valuation. Even after an impressively strong run over the past few weeks, I still feel that the banks are undervalued.
At today’s stock price, Scotiabank trades at an attractive forward price-to-earnings (P/E) ratio of about 10.
TSX stock #2: goeasy
Sticking with financial services stocks, I’ve got goeasy (TSX:GSY) on my radar right now.
The $2 billion company might not be able to match Scotiabank’s size, its growth potential should more than makeup for that.
Over the past five years, shares of goeasy are up now more than 500%. In comparison, the broader Canadian market isn’t even up 50%.
I’ve got this TSX stock on my radar right now in anticipation of an economic rebound this year. As the country slowly re-opens throughout the year, consumer spending should begin returning to pre-COVID-19 levels. If that does happen, goeasy could see a significant lift in demand for its products.
The company offers its Canadian customers access to all kinds of financial services. Home and auto loans, small business loans, and retail financing are three areas that could see a rise in demand for goeasy this year.
To make things even better, you don’t need to pay a premium to own this top stock. Considering it’s up more than 500% over the past five years, a forward P/E ratio of not even 15 for this TSX stock is an absolute steal.
TSX stock #3: Docebo
Last on my last of top TSX stocks is the hyper-growth company, Docebo (TSX:DCBO)(NYSE:DCBO).
The tech stock has been public for not even two years but shares are already up more than 200%. Growth like that doesn’t come cheap, though.
At today’s stock price, Docebo is one of the most expensive stocks on the TSX. You won’t find many companies valued higher than a price-to-sales ratio of 25. However, Docebo stock is trading at a rare discount right now. Shares are down more than 30% year to date, so now would be a wise time to start a position.
The tech company saw its share price explode last year during the pandemic. Demand for Docebo’s cloud-based training platforms surged, as remote work has become the norm over the past year.
A repeat performance in 2021 may be a lot to ask, but this tech stock still has plenty of market-beating growth ahead of it over the long term.
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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 Nicholas Dobroruka has no position in any of the stocks mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA.