Summer is heating up and so are stocks on the TSX. While it’s been a great year for Canadian stocks, but there are still some great buys out there. Here are four top stocks that are set to sizzle as we going into summer.
A perfect summer rest-stop
Alimentation Couche-Tard (TSX:ATD.A)(TSX:ATD.B) is an interesting TSX stock to buy this summer. As the world re-opens, people are keen to “hit the road” both domestically and internationally. Consequently, demand for fuel is likely to normalize. Couche-Tard gets the benefit of higher fuel volume sales and better margins.
Not only that, but higher travel volumes also mean more in-store spending. Couche-Tard has been working to diversify its business for the future. Today, it is experimenting with EV-charging stations in Europe, and broadening its food/convenience optionality across its portfolio.
This TSX stock has high insider ownership, an exceptional track record of returns, and good organic and acquisition opportunities out of the pandemic.
A top TSX beverage stock
Another TSX consumer staple stock set for a summer rebound is Andrew Peller (TSX: ADW.A). It is one of Canada’s largest producers and distributors of wines, spirits, and alcoholic beverages.
During the pandemic, it has been facing weaker margins from consumers preferring value wines. Yet, as pandemic restrictions relax, it should see an uptick in demand for its higher-margin premium and ultra-premium beverages.
Similarly, it is already seeing very strong summer bookings for its vineyard, restaurant, wine-tasting, and inn/events businesses. This year, it is looking to monetize some valuable land assets in the Vancouver region. As a result, it should be in a very good financial position to expand product offerings and perhaps make an acquisition or two.
An apartment REIT just heating up
The housing demand in Canada and the U.S. has been insatiable this year. Unfortunately, many buyers have been priced out of the market. Consequently, I think this will be a great year for apartment rental companies like BSR REIT (TSX: HOM.U). While it is listed on the TSX, this stock operates completely in the U.S. sunbelt states.
BSR owns affordable (~$900 per unit) garden-style apartments in some of the fastest-growing cities in the U.S. Its apartments are ideal for millennials/young professionals. It should benefit from strong migration and economic patterns occurring in its core cities of Austin, Dallas, and Houston.
It pays a nice 3.77% dividend now. Despite some good price momentum, this TSX stock still trades at a large discount to peers. Its CEO must think that’s cheap; he just bought over $1 million of shares recently.
A TSX energy stock
Rising summer temperatures are good for the price of natural gas. More air conditioning means more power demand and that means natural gas demand rises. Tourmaline Oil (TSX: TOU) will be a major beneficiary here.
Despite its name, Tourmaline Oil is actually Canada’s largest producer of natural gas. It sells nearly 20% of its volumes to California where there is a major gas shortage. There, gas prices are nearly triple what Tourmaline fetches in Canada.
Regardless, this is just a great TSX energy stock to own. It has very a smart management team, a low-levered balance sheet, a low cost of production, and some very prolific assets in Western Canada.
This all leads to very strong, stable free cash flow production. It pays a 1.9% dividend today. Yet, it expects a free cash flow yield of 12% in 2021, so it has lots of extra cash to pay down debt and keep rewarding shareholders.
