The past year has surprisingly turned out to be one of the most profitable years for stock investors. The stellar recovery rally aided by vaccine development and steady improvement in the economy has made investors rich. While most Canadian stocks appreciated significantly and are looking expensive, a few stocks with solid growth potential are well within investors’ reach. Let’s focus on five such TSX stocks that could deliver superior returns in the medium to long term and look attractive at current price levels.
Scotiabank
Scotiabank (TSX: BNS)(NYSE: BNS) is one of the top stocks to buy at current levels. The stock has gained about 46% in one year, and I see further room for growth. The bank is likely to continue to deliver stellar financials in the coming years amid a rise in economic activities and an improving operating environment.
The bank’s diversified revenue base, solid credit performance, and exposure to high-growth banking markets will likely support its growth. Meanwhile, lower provisions, an uptick in loans and deposit volumes, operating leverage, and improving efficiency could accelerate its earnings growth. Also, Scotiabank stock is trading cheaper than its peers and offers a solid dividend yield of 4.7%.
Cineplex
Cineplex (TSX: CGX) is another attractive bet that could deliver solid returns in a mid- to long-term period. The stock has surged over 63% in one year due to the favourable investor sentiment amid the ongoing vaccination and easing restrictions. While its stock appreciated quite a lot, it continues to trade at a significant discount from its pre-COVID price levels.
I believe the normalization of its operations and improvement in demand could give a solid boost to its stock price. The reopening of its movie theatres and entertainment venues and a strong slate of upcoming movies will likely drive its revenues and boost capacity. Its losses and cash burn are likely to decline, while expansion of food-delivery services, lower costs, and strong liquidity position could continue to drive its financial and operating performance.
AltaGas
AltaGas (TSX: ALA) is a solid stock for investors looking for growth and income. The utility stock has gained over 66% in one year and could continue to rise higher on the back of its new rate base and its rapidly growing midstream business. Thanks to its low-risk business, it generates stable cash flows that drive its dividend payments.
I believe AltaGas’s long-term contracts, growing global export tolling volumes, new customers additions, and cost-reduction initiatives position it well to deliver higher revenues and earnings. Meanwhile, its access to the premium Asian market and integration of Petrogas augur well for future growth.
Hexo
Hexo (TSX: HEXO)(NYSE:HEXO) is a cheap and excellent stock for your long-term portfolio. The stock has corrected by over 39% in six months but has solid growth prospects. I believe Hexo’s ability to acquire and integrate businesses is likely to boost its financials in the coming years.
The cannabis company has recently completed the acquisition of Zenabis Global and is in the process of buying two of Canada’s largest licensed producers: 48North Cannabis and Redecan. While the company’s back-to-back acquisitions help it generate significant cost synergies, it further accelerates global growth, drives future cash flows, and strengthens its market share. Hexo’s organic growth and expansion in the U.S. market should further support its long-term growth.
Suncor Energy
Investors can also consider adding Suncor Energy (TSX: SU)(NYSE: SU) stock to their long-term portfolios. Notably, the stock has appreciated over 24% this year on the back of higher crude prices and an improving operating environment. I expect the uptrend to sustain on the back of a recovery in demand and higher realizations.
I believe Suncor’s integrated assets, strategic investments, higher production, favourable product mix, lower cost base, and strong marketing should support its financial and operating performance. Moreover, its strong balance sheet and debt reduction bode well for future growth. Furthermore, share buybacks and regular dividend payments are likely to enhance shareholders’ value.
