If you are planning to invest in equity markets but are concerned about a tighter budget, don’t worry. One can create significant wealth over the long term by making small but regular investments over the long term. If you are ready to invest, here are four under-$50 Canadian stocks with the potential to deliver superior returns this year.
Dye & Durham
Dye & Durham (TSX:DND), which focuses on improving the efficiency and productivity of legal and business professionals, is trading 21.8% lower than its record highs in December. The concerns over its high valuation and closing of courthouses amid rising COVID-19 infections have dragged its stock price down. Meanwhile, the correction provides an excellent buying opportunity, given its healthy growth prospects.
Dye & Durham has a robust customer base of over 50,000, with a lower customer churn rate of 2%. The company has signed long-term contracts with its customers, which deliver stable and predictable earnings. Further, the reopening of courts, penetration into newer markets, and accretive acquisition bode well with its growth prospects. Meanwhile, the company’s management has set an optimistic target for the next two years, with its top line and adjusted EBITDA expected to reach $340 million and $200 million in fiscal 2022, respectively.
Second on my list would be one of the largest cannabis companies globally, Canopy Growth (TSX:WEED)(NYSE:CGC), which has lost over 50% of its stock value compared to its February highs. Meanwhile, the correction provides an excellent buying opportunity, given its growth initiatives and the expanding cannabis market amid increased legalization.
Canopy Growth’s acquisition of Supreme Cannabis could be a significant growth driver, as it could strengthen its product offerings and expand its distribution network in Canada. The company has also acquired a considerable market share in the cannabis-infused beverage segment, which offers high growth prospects. It has also joined hands with Southern Glazer’s Wine & Spirits to distribute its CBD-infused beverages in the United States. With cash and cash equivalents of $1.59 billion, the company is well positioned to support its growth initiatives.
Amid the acceleration in the transition toward clean energy, I have selected Northland Power (TSX:NPI) as my third pick. It owns and operates green energy infrastructure assets across Asia, Europe, Latin America, and North America. Earlier this month, the company had signed an agreement to acquire a portfolio of onshore renewable assets in Spain.
These acquisitions would position Northland Power as one of the top 10 players in the growing Spanish renewables market and act as a launchpad to expand its operations. The company has raised around $990 million through new equity offerings, which could fund these acquisitions.
Meanwhile, the company’s long-term growth prospects also look healthy, with the company’s management has planned to make capital investments in the range of $15-$20 billion over the next five years. Given the favorable industry trend and its growth initiatives, I am bullish on Northland Power.
My final pick would a midstream energy company, Enbridge (TSX:ENB)(NYSE:ENB), which generates around 98% of its adjusted EBITDA from regulated assets or long-term contracts, providing stability to its financials. It also trades at an attractive valuation, with its forward price-to-sales and forward price-to-earnings standing at 2.2 and 18.2, respectively.
Meanwhile, Enbridge is progressing with its $16 billion worth of secured growth projects, with the expectation of putting $10 billion worth of projects into service this year. Along with these investments, the recovery in oil demand could improve its asset utilization rate, driving its financials.
So, the company’s growth prospects look healthy. Besides, the company also pays quarterly dividends, with its forward yield standing at a healthy 7.1%.
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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.
The Motley Fool owns shares of and recommends Enbridge. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.