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5 Top TSX Stocks to Diversify Your Portfolio in Q3 2021

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Canadian stocks have started Q3 2021 on a slightly positive note after staging a massive rally in the previous five quarters in a row. As of July 6, the S&P/TSX Composite Index has risen by 0.7%. This could be the right time for investors to diversify their portfolios by adding some fundamentally strong stocks from different industries. Here are five top Canadian stocks that you can buy to diversify your stock portfolio this quarter.

Enbridge stock

Enbridge (TSX:ENB)(NYSE:ENB) is one of the top oil and gas transportation companies on the TSX. Its financials started significantly improving the first quarter this year after suffering due to COVID-related demand challenges last year. Enbridge is expected to register strong double-digit year-over-year earnings growth this year after falling by 8.7% last year.

Enbridge stock also could be a great addition to dividend investors’ portfolios, as it currently has a dividend yield of 6.7%. The stock is currently trading with 23% year-to-date gains against a 16.4% rise in the TSX Composite Index.

Shopify stock

Shopify (TSX:SHOP)(NYSE:SHOP) stock remained nearly silent in the first few months of 2021. Nonetheless, its stock started rallying in June, as it posted solid 22.5% gains for the month. Interestingly, SHOP stock has risen in seven out of the last eight quarters.

Its ongoing robust sales and earnings growth, along with the rising demand for e-commerce services, could help the company beat earnings expectations in the coming quarter. That’s one reason why its stock is likely to soar in the second half of the year.

Air Canada stock

Air Canada (TSX:AC) could be a great bet for investors who can take a little risk to gain big from the stock market. As the global pandemic badly affected the travel demand, Air Canada started burning big piles of cash each day. That’s why its stock fell by 53.1% in 2020.

However, the travel demand has started a handsome recovery across North America in recent months amid the reopening economies and rising vaccination. These factors could help Air Canada post a significant reduction in its cash-burn rate in the coming quarters and raise its sales growth estimates. With this, its stock could soon be on a path to a sharp recovery, I believe.

Royal Bank of Canada stock

Royal Bank of Canada (TSX:RY)(NYSE:RY) could be one of the safest stocks to invest in from the Canadian banking sector. The bank swam through the tough pandemic period swiftly with the help of its surging capital markets volume and profits. In the last couple of quarters, RBC’s core banking operations have also showcased massive improvements. That’s one reason why it’s expected to report about a 36% rise in its adjusted earnings in the ongoing fiscal year that would end in October 2021.

RY stock has inched up by nearly 21% this year, and its improving financials could help the stock extend the ongoing rally in the second half of the year.

Barrick Gold stock

After rallying in May 2021, the shares of many gold miners dived in June due to falling gold prices. Barrick Gold (TSX:ABX)(NYSE:GOLD) stock lost about 10.5% in June, erasing its 10% gains from May. The stock is currently trading with 8% year-to-date losses, despite its strong recent sales growth trend.

As many experts believe that the pandemic-related uncertainty might not be completely over yet, you may want to keep your stock portfolio well diversified. Gold prices tend to go up in uncertain times, boosting gold miners’ profitability. That’s why buying a gold mining company like Barrick Gold’s stock could be a wise decision to hedge your stock portfolio against unwanted risks.

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 owns shares of and recommends Enbridge and Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

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