Although the Delta variant has jeopardized re-opening optimism recently, it does not seem like a lasting issue when it comes to the markets. TSX stocks at large will likely resume their upward climb as vaccination gains momentum in the next few months. Here are three TSX stocks that look like strong buying opportunities in the current scenario.
BRP
Many consumer stocks have taken a beating recently due to the resurgence of COVID-19 cases. But one of these stocks that brings an excellent opportunity is BRP (TSX: DOO)(NASDAQ:DOOO). I think the recent weakness in BRP shares is temporary and offers a strong recovery potential in the post-pandemic environment.
BRP is a Powersports vehicle maker that operates in more than 120 countries. It saw notable revenue growth in the last few quarters, driven by increased demand. The company could see even higher demand once travel and leisure activities gain steam post-pandemic.
BRP management forecast more than 50% normalized earnings growth for the fiscal year 2022. The stock has already soared more than 450% since the epic crash last year.
Interestingly, it is still notably undervalued given the expected strong demand growth and upbeat earnings guidance. Also, BRP’s leadership position and established product portfolio should fuel a relatively faster recovery in the next few quarters.
Waste Connections
On the face of it, Waste Connections (TSX: WCN)(NYSE: WCN) has a boring business model. Collecting waste, disposing, and recycling it is such an unattractive, tedious business. However, going beyond these inhibitions, a $42 billion Waste Connections has made it interesting with its appealing growth.
Waste Connections is the third-largest solid waste collection company in North America. It caters to seven million customers across 43 states in the U.S. and six provinces in Canada. Notably, its net income has increased by a 10% compound annual growth rate (CAGR) since 2016. This steep growth effectively seeped into its market performance, with stock returning 170% in the last five years.
As we emerge from the pandemic, business opportunities from commercial and industrial customers may once again rise for Waste Connections. That’s why the management has raised its guidance for the full year 2021, aiming for ~10% revenue growth year over year. For those looking for a low volatile, defensive stock, Waste Connections is a decent long-term option.
Enbridge
If you are looking for stable dividend income for the long term, energy midstream giant Enbridge (TSX: ENB)(NYSE: ENB) is one top choice. It yields a handsome 7% at the moment, more than double the TSX stocks at large.
Enbridge earns a majority of its earnings from long-term, fixed-fee contracts with investment-grade counterparties. As a result, its earnings are relatively less affected by volatile oil and gas prices, which renders it a safe bet for investors. And that’s why Enridge continued to increase dividends even during the pandemic-ravaged 2020. It has one of Canada’s longest dividend growth streaks, with 26 years of consecutive payout increases.
ENB’s consistently growing dividends played a big role in driving total shareholder returns in the last two decades. ENB stock has returned 10% on average per year since 2001 against the 4% return from the TSX Composite Index.
