Many Canadian stocks on the TSX Index are trading at 52-week and all-time highs. As the market continues to heat up, it can be difficult to find stocks that are growing but at a reasonable price.
To thrive in these kinds of markets, you need to be thrifty and think long term. Warren Buffett has long warned investors that “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.” So, for those of you looking for long-term value, here are three Canadian stocks that look like attractive buys in April 2021.
An undervalued, diversified Canadian tech stock
Many investors have never heard of Calian Group (TSX:CGY), but it is an ideal growth-at-a-reasonable price stock. Calian is a leading provider of niche technological solutions for complex institutions. Some of its customers include the likes of the Canadian Armed Forces, the Canadian Space Agency, and NATO.
It provides specialty solutions in cyber security, satcom, health and virtual care, and customized training. In 2020, it had its best year ever. It grew revenues and adjusted EBITDA by 26% and 36%. It is targeting a minimum of 10% revenue growth and +30% EBITDA growth in 2021.
Considering Calian’s streak of attractive acquisitions, I think it could certainly get there. Its balance sheet is primed for more consolidation this year as well. Today, it only trades with a forward price-to-earnings multiple of 16 times. Given its solid growth momentum, the stock looks like a bargain here.
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A global convenience leader
Alimentation Couche-Tard (TSX:ATD.B) is another Canadian stock that looks interesting in April. Other than the fact that Circle K (its flagship store brand) has my favourite selection of Froster slushes, it is a really well-managed company. Over the past 10 years, it has done a great job of consolidating gas stations and convenience stores across the world.
This Canadian stock has enjoyed an EBITDA CAGR of 22% since 2011. While it failed at a recent merger in France, it is primed for a large synergistic acquisition in the near future. In the meantime, the company has aggressively been buying back its stock ($900 million worth). If management thinks its stock is cheap, so should you. It only has a price-to-earnings ratio of 13.5 times right now.
An up-and-coming Canadian tech stock darling
The last Canadian stock that looks like a great opportunity in April is Telus International (TSX:TIXT)(NYSE:TIXT). Telus International just IPO’d from Telus in February 2021. In fact, it was one of the largest technology IPOs in Canada ever.
Telus International is a leading provider of digital customer experience solutions. Since 2017, the company has grown revenues by a CAGR of 34%. In 2020, it grew revenues, adjusted EBITDA, and free cash flows by 55%, 73%, and 140%, respectively.
Unlike many American tech stocks, this stock is actually profitable — and very profitable at that. Yet it is still growing at a rapid clip. The digital customer experience segment is expected to grow annually by 20-25% a year. TIXT has a leading competitive edge, especially since it acquired top data analytics and machine learning firm, Lionbridge AI. As a result, it should be able to outpace industry growth going forward.
This Canadian stock is not cheap by any means. It has a price to sales of five times and a price to adjusted earnings of 40 times. Yet, given the rate of growth this company is seeing, it is not unreasonable. The stock is 10% off its IPO high, so it looks attractive here.
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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 Robin Brown owns shares of Calian Group Ltd., TELUS CORPORATION, and TELUS International (Cda) Inc. The Motley Fool owns shares of and recommends ALIMENTATION COUCHE-TARD INC. The Motley Fool recommends Calian Group Ltd. and TELUS CORPORATION.