This season’s corporate earnings growth will be the biggest driver for TSX stocks for the next few months. Despite the uncertain recovery from the pandemic, companies will likely report higher earnings this season compared to 2020. So, which Canadian names are you betting on?
Shopify
The tech giant Shopify (TSX:SHOP)(NYSE:SHOP) will report its Q1 2021 earnings on April 28. Shares of Shopify have been up almost 60% in the last 12 months. Apart from the superior financial growth, the pandemic and ensuing closures acted as a catalyst for Shopify last year.
Importantly, the stellar growth will likely continue in 2021 as well. Robust e-commerce activities in Q1 amid continued restrictions might have helped Shopify. Merchant base expansion should also have a positive impact on its financials. Shopify is still a relatively smaller player in a large addressable market, which suggests a huge scope for growth.
Interestingly, Shopify’s upbeat Q1 earnings could drive the stock to higher levels. SHOP stock has seen a notable pullback recently, which makes it an attractive bet ahead of its earnings.
Whitecap Resources
Another notable earnings that investors may want to pay close attention to is of Whitecap Resources (TSX:WCP). Its Q4 2020 net profits swelled more than 2,400% sequentially. Whitecap stock is among the top gainers on the TSX, with an almost a 300% surge in the last 12 months.
Notably, Whitecap Resources produced 68,662 barrels of oil in 2020, a 3% decrease compared to 2019. But its capital expenditures in 2020 declined 52% reduced against 2019. Improving operational efficiency should reflect in the company’s profit margins in the coming quarters, which could be a big positive for long-term investors. It intends to produce greater than 100,000 barrels of oil this year.
The oil and gas company Whitecap will report its Q1 2021 earnings on April 29. Investors can expect superior earnings on higher production and upbeat energy commodity prices. Whitecap Resources’s recent acquisitions of NAL Energy and Kicking Horse Oil & Gas should increase its production and should accelerate earnings growth in the next few years.
Whitecap Resources has a healthy balance sheet with a leverage ratio close to one. Also, it pays monthly dividends and yields 3.4% at the moment. A handsome dividend profile and decent capital gain prospects make Whitecap Resources stock an attractive bet for long-term investors.
BCE
The telecom giant BCE (TSX:BCE)(NYSE:BCE) will report its Q1 2021 earnings on April 29. The stock is marginally up in the last 12 months, notably lagging the TSX stocks at large. It will be interesting to see how the pandemic impacted the company during the first quarter.
During Q4 2020, BCE reported revenues of $6.1 billion — a 3% drop against Q4 2019. It posted net earnings of $889 million during the quarter, which was a remarkable 32% growth year over year.
BCE has been aggressively spending on network improvements and its 5G infrastructure. Thus, the management outlook amid the heated 5G race in Canada could be crucial for BCE stock.
BCE stock is currently trading at a dividend yield of 6% — much higher than peers. Its earnings visibility and recession-resilient operations will likely continue to enable stable dividends.
