The TSX bull rally in 2021 brought out exciting investment prospects for growth investors. Two names are high-flyers with the potentials to deliver considerable returns in the near term, while one is excellent for growth and income stability.
If you were to invest this instant, consider AutoCanada (TSX:ACQ), Uni-Select (TSX:UNS), and Alimentation Couche-Tard (TSX:ATD.A)(TSX:ATD.B). You’d have a diversified and balanced mix of assets in your portfolio. The respective businesses should thrive in the second half of 2021 and beyond.
Strong buy rating
AutoCanada is an unlikely top performer, but it sure outperforms the more popular stocks on the TSX. Thus far, in 2021, investors enjoy a 149.43% year-to-date gain. Also, the current share price of $58.89 is 234.98% higher than a year ago. It’s little wonder that market analysts recommend a strong buy rating for this consumer-cyclical stock.
The $1.59 billion multi-location automobile dealership group in North America reported stellar financial results in Q1 2021. AutoCanada’s Executive Chairman Paul Antony said, “We delivered another record-setting performance and a ninth consecutive quarter of market-outpacing growth.” Revenue growth from Q1 2020 was 36.8%, but the 145.5% turnaround in net income surprised investors.
From a net loss of $46.8 million, AutoCanada reported $21.33 million in net income during the quarter. Mr. Antony adds that with the continued execution of its business model, the company could sustain its top-tier operating performance. It should also support the next leg of growth.
Prepared for market recovery
Uni-Select reported $20.25 million in net loss Q2 2021, although management believes the 37.6% increase in total sales indicates a bounce back. Uni-Select Executive Chairman and CE Brian McManus said, “We are very pleased with our second-quarter results, which reflect a strong market recovery from the worst of the pandemic and sequential improvement in the business.”
According to McManus, the company primarily used the $43 million cash flow from operations to reduce total net debt and improve the leverage ratio to 2.9x. Management’s near-term focus is to align the core businesses and identify growth opportunities as Uni-Select prepares for the reopening.
Meanwhile, the shares of this $749 million that distribute auto parts worldwide is among TSX’s high-flyers like AutoCanada. At $17.69 per share, the year-to-date gain is 118.13%, while the trailing one-year price return is 133.89%.
Portfolio stability
Alimentation Couche-Tard, the global leader in the convenience store sector, is a consumer defensive stock. The $54.78 billion company pays a modest 0.69% dividend ($51.09 per share), but it should add stability to anyone’s portfolio. Alain Bouchard, Couche-Tard’s founder and Executive Chairman of the Board, said the company got stronger, better, and ready to grow in the future.
Because Couche-Tard is ready, financially and operationally, management believes the goal to become the world’s preferred destination for convenience and fuel is realizable. The business of the 14,000-strong store network remained stable in fiscal 2021.
For the year ended April 25, 2021), revenue declined by 15.5% versus fiscal 2020 due to the impact of the pandemic on fuel demand and lower average road transportation fuel selling price. However, net earnings increased 15% to $2.7 billion. In late June 2021, Couche-Tard increased its stake in cannabis producer Fire & Flower to 22.35%.
Value for money
AutoCanada, Uni-Select, and Alimentation Couche-Tard are the top choices if you want value for money and excellent reopening plays. All three businesses are not lacking in growth and should do better in the post-pandemic.
