The TSX Composite Index has started the third quarter on a slightly mixed note after consecutively rising in the previous five quarters. The Canadian market benchmark is currently trading with less than 1% quarter-to-date gains after inching up by nearly 16% in the first half of the year. Nonetheless, some stocks still look cheap as their improving financials could help them surge in the second half of this year.
Let’s take a closer look at three of such stocks that I expect to fly this quarter and beyond.
Magna International stock
Magna International (TSX:MG)(NYSE:MGA) could be one of the best stocks to bet on right now as its financials are rapidly improving this year. The company faced several challenges last year due to a sudden and sharp decline in automobile demand amid the pandemic. That’s why its sales fell by 17% in 2020.
On the positive side, a sharp recovery in vehicle demand globally boosted Magna’s first-quarter revenue by nearly 18% on a year-over-year basis. As the ongoing automobile demand recovery continues in the coming quarters, the company’s sales are likely to improve further. It could be one of the reasons why analysts expect a more than 25% YoY rise in its 2021 sales.
Magna International’s stock has risen by 26% this year so far. I expect its ongoing rally to extend to the second half of the year.
National Bank of Canada stock
National Bank of Canada (TSX:NA) is another great Canadian stock you may want to buy in July. Last month, its stock fell by 2.4% after consistently rising for the previous five months in a row. With this, the stock is still trading with solid 30.4% year-to-date gains.
As the improving economic environment is becoming more conducive to business growth, it’s a wise decision to add a banking sector stock to your portfolio right now. Despite facing COVID-19 driven operational challenges, the National Bank of Canada’s total revenue rose by 7% YoY to $8.2 billion in the fiscal year 2020. Moreover, the bank’s revenue growth rate improved further in the last couple of quarters.
Its strong credit quality, solid wealth management segment performance, and improving core banking operations could help the National Bank of Canada stock rally in the second half.
BlackBerry (TSX:BB)(NYSE:BB) has been one of the top-performing stocks on the TSX this year. In the last nine months, the stock has risen by nearly 150% against a 25% increase in the TSX Composite benchmark. The ongoing Reddit trading mania partly helped it rally in the first half of the year. In my opinion, its improving fundamentals are another big reason for driving its stock higher.
BlackBerry has been preparing to benefit from the fast-growing electric and autonomous vehicle demand. The company has increased its focus on developing useful technologies for futuristic vehicles — that could help it gain big from the upcoming self-driving and electric car revolution, I believe.
Apart from these positive factors, the rising demand for its cybersecurity solutions could help BB stock yielded solid returns.
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 recommends BlackBerry and Magna Int’l. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.