The Motley Fool

3 Top Canadian Stocks to Buy in May 2021

Image source: Getty Images

The TSX continues to trade at or near all-time highs. With the market heating up, investors may believe the time has passed to find Canadian stocks that offer growth or value.

However, if growth or value is truly your goal, you need to think long term. As Warren Buffett has said, you need to be able to hold a stock for 10 years, or else you shouldn’t even hold it for 10 minutes. So, this month, look at Canadian stocks offer value today and will give you returns even a decade from now.

A Canadian stock geared for growth

Investors looking for Canadian stocks may not have heard of SolGold Plc (TSX:SOLG), but it’s perfect for investors looking for strong growth at a reasonable price. The $1.1 billion gold, copper, and silver miner explores and mines around the world and looks to be on the verge of yet another acquisition.

Recent insider filings report that at the end of April, 1,008,565 shares were purchased by insiders with direct ownership of SolGold stock. According to reports, this is because the company is on the verge of another major acquisition. The company announced in the end of April that it would be looking to make a “significant investment into Ecuador and its mineral assets.” It looks like such an announcement will happen any day now, increasing SolGold stock’s hold as the largest and most active concession holder in Ecuador.

This recent news is bolstered by the fact that shares trade at 2.9 times book value, making it a solid value stock. Shares are up 14% in the last year, coming down as the price of gold slumped. But it looks like this is one of the Canadian stocks just starting to gear up.

5 TSX Stocks Under $5

Click here to learn more!

An economic rebound buy

Investors still fear that the continuing pandemic will affect their Canadian stocks. That’s certainly true now, but not forever. That’s why Alimentation Couche-Tard (TSX:ATD.B) is such a fantastic buy in May. An economic rebound means revenue should skyrocket as the world returns to normal. It has thousands of Circle K and gas retail locations across North America, and has been expanding around the world.

Yet the company remains well undervalued at 2.9 times book value and 0.8 times sales. That only looks to become more valuable as Alimentation continues to make more acquisitions. Insiders think so too, as the company continues to buy back its own stock at record levels. And this is the perfect long-term hold, with shares up 950% in the last decade for a compound annual growth rate (CAGR) of 26.5% in that time!

A recovery play among Canadian stocks

It’s the stock everyone wants to know about: Air Canada (TSX:AC). If you’ve followed Warren Buffett’s advice and think long term, Air Canada stock is the perfect buy among Canadian stocks.

The company is swimming in $13 billion of debt, with a recent $5.9 billion government aid package delivered. Much of that is going to repay customers, so it might have investors thinking, “Why would I buy?” The answer is that most of that debt was taken on before the pandemic, so the company had a plan to pay it all back.

The plan was purchasing almost guaranteed cash cows. Air Canada stock bought fuel-efficient aircraft and its Aeroplan loyalty program. Now that the Transat A.T. deal has fallen through and Air Canada has gone into cargo, Air Canada stock has even more money to work with. So, when passengers are back at pre-pandemic levels, the company should have no trouble getting back in the black.

Let’s look at the bigger picture. The company’s CAGR for net income during the last five years has grown at a respectable 45%. While sales are down now, that won’t remain so forever. And at 1.5 times sales and 4.9 times book value, it looks like investors are really starting to catch on to Canadian stocks like this one.

Speaking about TOP Stocks, check out this FREE report detailing our favourite small-cap stock picks for 2021.

5 Canadian Growth Stocks Under $5

We are giving away a FREE copy of our "5 Small-Cap Canadian Growth Stocks Under $5" report. These are 5 Canadian stocks that we think are screaming buys today.

Get Your Free Report Today

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 Amy Legate-Wolfe owns shares of Air Canada. The Motley Fool owns shares of and recommends ALIMENTATION COUCHE-TARD INC.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.