After rallying for months, the TSX Composite Index seems to have calmed a bit recently. TSX stocks, on average, gained around 50% in the last 12 months on the hopes of pandemic’s end and a looming economic recovery. If you are sitting on some extra cash, consider these three Canadian names to bet on for the long term.
The tech titan Shopify (TSX:SHOP)(NYSE:SHOP) stock has fallen almost 32% in the last six weeks. It is currently trading at its five-month lows. The top growth stock looks attractive after its recent fall, as it is available at a relatively cheaper valuation while its growth prospects remain intact.
I think Shopify will continue to grow its top line at a much superior rate, even post-pandemic. Its growing merchant base and strong product portfolio could be a solid revenue growth driver in the medium to long term.
Shopify had below 6% market share in the retail e-commerce space in 2019. It has steadily grown to 8.6% last year. Although Amazon is way ahead in terms of market share, Shopify seems gradually eating into its pie with its own set of competitive advantages.
Despite the recent fall, I think SHOP stock is still trading at a premium valuation. However, the premium is quite justified given its strong growth potential and superior historical performance.
Smaller Canadian energy companies have substantially outperformed their bigger counterparts recently. Consider Whitecap Resources (TSX:WCP)(NYSE:WCP). It is up more than 650% in the last 12 months, compared to bigger peer stocks that have almost doubled in the same period.
The energy company saw its net income surge to $332 million in Q4 2020 against a loss of $204 million in Q4 2019. Higher demand and production drove such superior earnings growth. Interestingly, Whitecap Resources managed production of 68,662 barrels of oil, a 3% decrease compared to 2019, with a 52% reduced capital expenditure. It intends to produce greater than 100,000 barrels of oil this year.
Driven by record performance in Q4 2020, Whitecap increased its monthly dividends by 5% to $0.015. It indicates an annualized yield of 2.6% at the moment. Whitecap also used excess free cash flow to repay debt in Q4. Its reasonable leverage position, strong balance sheet, and production profile make it an attractive bet for long-term investors.
Note that Whitecap stock is still trading at a discounted valuation, despite its vertical rally.
HIVE Blockchain Technologies
If you want to bet on cryptocurrencies, HIVE Blockchain Technologies (TSXV:HIVE) stock could be a convenient option. Hive mines Bitcoin and Ethereum, and the stock has a positive correlation with these cryptos. The euphoria around these cryptos has driven the HIVE stock, gaining more than 2,240% in the last 12 months.
Hive produces new crypto coins every day, which it can monetize for revenues. In Q4 2020, the company reported revenues of $13.7 million, a notable 174% growth year over year. The stock has dropped almost 40% since last month.
Investors should note that underlying uncertainties make this crypto miner a risky bet. There are not just regulatory concerns; the volatility risk is so big that even high-risk investors feel the pinch.
Before you consider Hive Blockchain, you may want to hear this.
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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.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned. David Gardner owns shares of Amazon. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Amazon, Shopify, and Shopify and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon.