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3 Top TSX Stocks That Outperformed Their Individual Sectors

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The Canadian broad market index has soared almost 55% since the epic selloff in March last year. The rally marks a strong recovery from the pandemic gloom and underlines an impending economic revival. Energy, tech, and banking sectors stood particularly strong in the recent reopening rally. Here are three top TSX stocks that outperformed their particular sector in the last 12 months.

Whitecap Resources

The energy sector is one of the top-rallying sectors amid the reopening hopes. It was also one of the most hurt sectors during the lockdowns and restrictions last year.

While TSX Index is up 23% in the last 12 months, energy stocks at large have gained 44%. However, one mid-cap stock that has stood notably tall is Whitecap Resources (TSX:WCP). It has returned more than 105% in the same period, notably beating peers’ average.

Increasing production and superior crude oil prices notably boosted its earnings in this period. Apart from strong financial growth, it also has low leverage and a decent liquidity position. It has been aggressively repaying its debt for the last few quarters. WCP stock currently yields 4% — higher than TSX stocks at large.

Interestingly, the trend can continue with higher expected energy prices amid reopening hopes. Whitecap’s strong balance sheet, attractive dividend yield, and undervalued stock make it an appealing pick for long-term investors.

Bank of Montreal

Bank of Montreal (TSX:BMO)(NYSE:BMO) stock has returned 70% in the last 12 months, outperforming its peer Big Six Canadian bank stocks. Overall, the economic recovery and heavy reversal from loan-loss provisions drove the rally recently.

In the recently reported quarter, BMO reversed $70 million from provisions, suggesting an improving asset quality. In Q2 2021, its net income soared 82% year over year to $2.3 billion. Bank of Montreal is the eighth-largest bank by assets in North America.

BMO stock yields 3.3% at the moment, which is in line with its peers. We may expect a generous dividend hike from Canadian banks later in the year amid the fading pandemic fears and rising loan books. Canada’s banking regulator banned dividend increases and share buybacks amid the pandemic last year.

Its stable dividend profile, diversified earnings base, and impending economic recovery should help unlock more value for shareholders in the long term.

Lightspeed Commerce

The tech sector has been a long-term outperformer in Canadian markets in the last few years. But one tech stock that absolutely thrashed peers is Lightspeed Commerce (TSX:LSPD)(NYSE:LSPD). It’s returned 200% in the last 12 months, while the tech stocks at large gained 40%.

Lightspeed stock came roaring back from its last year’s lows amid reopenings. In the first half of 2021, the company grew its revenues by a handsome 174% year over year. LSPD has created robust wealth for shareholders since going public, returning more than 550% since March 2019.

Its strategic acquisitions and vertical revenue growth fueled its stock. The company could continue to fire on all cylinders with an expansion of its merchant base in high-growth markets. In addition, the reopening could further cheer investors, driving the stock even higher.

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 Lightspeed POS Inc and Lightspeed POS Inc. Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned.

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