While the TSX Composite Index has surged a remarkable 60% in the last 12 months, few TSX stocks have notably outperformed. Canada’s biggest natural gas producer stock Tourmaline Oil (TSX:TOU) is up a massive 225%, while the powersports vehicle maker BRP (TSX:DOO)(NASDAQ:DOOO) has rallied 450% since last year. Interestingly, these TSX stocks still seem to have great growth potential for the rest of 2021 and beyond despite the rally.
A $9 billion global Powersports leader BRP has seen sizeable gains in the last few months. The company’s financials saw a notable recovery in its last quarterly release. Its earnings increased 47% year-over-year for the quarter ended October 31, 2020.
The stock has surged 22% since its last release. BRP will release its fourth-quarter earnings on March 25, 2021. I expect its strong performance will continue and could drive the stock further higher.
BRP, the leader in recreational aircraft and all-terrain vehicles segments, has seen a visible demand recovery in the last few quarters. The trend will likely accelerate when mobility and discretionary spending returns to normal in the next few months.
Higher spending on leisure and travel, particularly post-pandemic, could see pent-up demand for BRP vehicles. The stock also looks fairly valued despite the recent rally. Its global presence, scale, and expected pent-up demand make it an attractive bet for long-term investors.
Tourmaline Oil (TSX:TOU)(NYSE:TOU) is a $7 billion oil and gas production company in Canada. Its profits went to the moon last quarter amid higher demand and higher energy commodity prices. Its Q4 revenues increased by 19%, while net income swelled 926% year-over-year.
Moreover, the company delivered an upbeat commentary and bullish guidance for 2021. It aims to generate $1.1 billion in free cash flow this year, which will be used for debt repayments, dividend increases and acquisitions.
Very few energy companies posted profits for the full-year 2020 amid the pandemic-related challenges. However, Tourmaline stood strong and delivered a 93% increase in profits for the full-year 2020.
It would be imprudent to expect the same performance this year as well. However, Tourmaline Oil investors can hope for superior growth amid higher energy prices and an improving demand outlook. Its stable dividends and discounted valuation suggest a further upside in the TOU stock in 2021.
Wheaton Precious Metals
I think gold miners have seen enough weakness in the last 6-8 months, and they might change the course soon. A relatively safer Wheaton Precious Metals (TSX:WPM)(NYSE:WPM) is my top pick among gold-miner stocks to play the gold recovery.
Wheaton is a gold streamer that offers an additional layer of safety for investors as compared to traditional miners. Streamers are low-risk, high-margin businesses that don’t directly run mines. They pay upfront fees to drillers and buy all or a portion of metal yielded from those mines. This avoids a huge capital outlay and minimizes operational risk.
WPM stock has dropped around 35% in the last six months. Still, it is sitting at handsome gains of 40% for the last 12 months. If you want to have some exposure to gold, Wheaton can be your pick because of its low-risk model and stellar earnings growth.
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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 Vineet Kulkarni has no position in any of the stocks mentioned.