Canadian equity security markets are looking at decent long-term outlooks despite the possibility of near-term volatility. As the vaccine rollout continues throughout the country, everyone is becoming more hopeful. The expectation of a recovery in demand and economic expansion as the pandemic subsides could drive markets higher in the second half of 2021.
I will discuss three stocks trading on the TSX that you could consider adding to your portfolio right now to enjoy outsized returns this year.
Aphria Inc. (TSX:APHA)(NASDAQ:APHA) was not an attractive asset to consider for your portfolio for a long time due to the weakness in the cannabis sector. The fear of the cannabis industry becoming another target for Reddit users dragged Aphria’s share prices down to oversold territory.
The sharp pullback in its valuation could be an excellent opportunity for value-seeking investors to capitalize on its growth prospects. Aphria launched higher-potency cannabis-related products to revitalize its market share in Canada’s recreational cannabis market.
It also recently acquired SweetWater Beverage Company to expand its operations in the US cannabis market. Its merger with Tilray could increase its market share in both domestic and international markets. All these factors make it an attractive investment to consider for its potential growth.
Magna International (TSX:MG)(NYSE:MGA) is the third-largest auto component manufacturing company worldwide. The company provided its investors with over 34% in returns on investment last year. At writing, the stock is up almost 170% from its valuation 12 months ago, making it an amazing success story.
Magna International could still be a viable addition to your portfolio at its current valuation due to its immense growth potential. The uptrend could likely continue because of its significant exposure to the Electric Vehicle (EV) market.
Its joint venture with Beijing Electric Vehicle Company and LG Electronics could help Magna International become vital to the growing EV sector. The management expects that 50% of its production would be for the EV sector by 2023, making it another excellent asset to consider.
Enbridge Inc. (TSX:ENB)(NYSE:ENB) faced a tough year during 2020 due to the oil price crisis and the pandemic working in tandem to batter the entire energy sector. Enbridge has already had a solid start to 2021, with its share prices rising 13.17% on a year-to-date basis at writing. Despite its strong start to the year, Enbridge is trading for more than 17% below its pre-pandemic valuation.
As the situation with the pandemic improves, oil demand could increase amid the economic expansion. The result could be a massive increase in Enbridge’s asset utilization rate, boosting its financials and its valuation on the stock market.
The company is making progress with its $16 billion growth projects, and it is currently trading for an attractive valuation. Enbridge could be another excellent stock to consider for oversized returns this year.
It is impossible to accurately predict which companies will offer investors the most significant returns as the economic expansion continues. It is all a matter of making the most calculated decisions based on which company has the most potential.
Enbridge, Aphria Inc., and Magna International are hopeful prospects for oversized returns considering the companies’ current valuations and changing market conditions.
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Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends Magna Int’l.