I have said it before that investing in stocks is easy. However, investing in the right stock that could outpace the TSX Index is hard. So, with that in the background, I have shortlisted five Canadian stocks that could consistently deliver stellar returns and outperform the Index by a significant margin in the long run.
Let’s delve deeper into the five stocks that could perform exceptionally well in 2021 and beyond.
goeasy (TSX:GSY) is among the top-performing stocks listed on the TSX that created a significant amount of wealth for its investors. Its stock has risen about 746% in five years and by 160% in one year. Furthermore, goeasy has consistently boosted its investors’ returns through higher dividend payments. On average, the subprime lender has increased its dividend by 34% annually in the last seven years and offers a decent yield at current levels.
I believe the steady improvement in the economy, its growing loan portfolio, product and channel expansion, and a large lending market provides a solid foundation for stellar growth in its top line. Meanwhile, increased penetration of secured loans, robust payments volumes, and expense management are likely to drive solid double-digit growth in its earnings that could drive its dividend and support the uptrend in its stock.
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Air Canada (TSX:AC) stock is up about 18.5% this year, and the uptrend could sustain in the coming quarters, reflecting a recovery in air travel demand and return to normal. Despite the near-term challenges, its operating capacity and net cash burn rate could show sequential improvement on the back of the ongoing vaccination.
I expect Air Canada stock to get a significant boost from the easing of travel restrictions and reopening of the international borders. Further, its focus on revenue diversification, momentum in the air cargo business, and lower cost base augur well for future growth. Air Canada stock trades a considerable discount from its pre-pandemic levels and is an attractive recovery play.
Dye & Durham
Dye & Durham (TSX:DND) is performing exceptionally well and has consistently delivered solid revenues and adjusted EBITDA in the past several quarters, reflecting solid demand for its products and services and accretive acquisitions.
Its large blue-chip customer base, long-term contracts, and high client-retention rate are likely to support its financials in the coming quarters. Meanwhile, a strong balance sheet, robust M&A pipeline, and geographic expansion suggest that Dye & Durham’s pace of growth is likely to accelerate further, which could drive its stock very high.
A stellar recovery in oil prices, improving demand, and rising economic activities suggest Suncor Energy (TSX:SU)(NYSE:SU) could handily outpace the Index in 2021 and beyond. It has gained over 46% this year, and I see further upside in its stock.
I believe increased volumes and higher average prices are likely to significantly boost Suncor’s financials and, in turn, its stock. Further, its integrated assets, favourable mix, and lower cost base are likely to support its profitability. Suncor is also focusing on lowering debt and is buying back stock. Also, it could pay regular quarterly dividends and enhance its shareholders’ value.
I expect Lightspeed POS (TSX:LSPD)(NYSE:LSPD) stock to grow enormously over the next decade, reflecting stellar demand for its omnichannel payment platform, positive secular industry trends, and new product launches. Further, growth in its customer base, adoption of its multiple modules, expansion in the high-growth markets augurs well for future growth.
Lightspeed stock is also likely to get a solid boost from its capital allocation strategy. Its recent acquisitions are likely to bolster its growth rate and drive its stock higher. I believe the momentum in its base business, ability to grow inorganically, and increasing average revenue per user provides a long runway for growth.
Besides Lightspeed, take a look at this free list of high-growth value stocks trading under $50:
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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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool owns shares of Lightspeed POS Inc.