While the volatility in the market remains elevated, investors with a long-term outlook shouldn’t worry much and continue to add stocks with strong fundamentals. I believe the economic recovery, continued shift towards omnichannel platforms, and higher demand provide a solid foundation for outsized growth.
I have selected three such fundamentally strong TSX stocks that can beat the benchmark index by a wide margin and deliver stellar returns. So, if you’ve got $3,000, snap up these top TSX stocks right now.
Bank of Montreal
I am bullish on Bank of Montreal (TSX: BMO)(NYSE: BMO) and expect it to continue to outperform the broader markets in 2021 and beyond. Shares of the Canadian banking giant are up about 87% in one year and yet trade at a valuation that is well within reach. Further, it has a long history of paying regular dividends and offers a decent yield, making it one of the top income stocks listed on the TSX.
I expect Bank of Montreal to deliver robust earnings in 2021, reflecting revenue growth, a sharp decline in provisions, and improved efficiency. Notably, Bank of Montreal’s adjusted EPS jumped about 79% in the first two quarters of fiscal 2021. The bank’s provisions for credit losses dropped sharply, while it posted an adjusted net efficiency ratio of 56.4% compared to 62.0% in the prior-year period.
I believe the economic recovery, higher loan and deposit volumes, diversified revenue base, lower provisions, and operating leverage to continue to drive its top and bottom lines. Bank of Montreal trades at a price-to-earnings multiple of 11, which is lower than most of its peers. Further, its price-to-book value multiple of 1.6 is also well below the peer group average. The bank has paid dividends for 192 years and offers a 3.4%.
Lightspeed
Investors looking for a high-growth stock could consider buying Lightspeed POS (TSX: LSPD)(NYSE: LSPD). The company is witnessing solid demand for its commerce-enabling platform. Further, the demand is likely to sustain in the long run, reflecting a continued shift in selling models and higher spending on e-commerce platforms.
Lightspeed is growing rapidly, adding new customers, and is expanding in the high-growth markets that could significantly boost its prospects. Also, its acquisition of multiple POS platforms and product expansion positions it well to capitalize on the positive secular industry trends.
I believe Lightspeed’s revenues could continue to grow at a very high double-digit rate in the coming years, which is encouraging. Meanwhile, its average revenue per user is expected to increase, as existing customers opt for its multiple modules. The strength in its core business, solid capital-allocation strategy, and innovation are likely to drive Lightspeed stock higher over the next decade.
goeasy
goeasy (TSX: GSY) has made its investors very rich and delivered sky-high returns over the past several years. Its growing loan portfolio, large addressable market, operating leverage, and strong payments volumes drive double-digit growth in its revenues and earnings and support the uptrend in its stock.
With the economic expansion and recovery in consumer demand, I expect goeasy’s earnings to continue to grow rapidly. Furthermore, it is likely to boost shareholders’ value through higher dividend payments. Its growing loan portfolio, new product launches, multichannel offerings, increasing loan size, higher penetration of secured loans, and cost savings are likely to drive double-digit growth in its revenues and profitability. Further, strategic acquisitions are likely to accelerate its growth.
The company has consistently increased its dividend at a very high rate and could continue to hike it further, thanks to its high-quality earnings base. goeasy offers a decent yield of 1.8%.
