As the market continues to rally, investors are increasingly finding it difficult to pick good stocks that have the potential to yield solid returns in the coming quarters. But thankfully, the ongoing economic recovery and rising consumer spendings are boosting corporate earnings. This positive earnings growth trend is likely to drive these two Canadian stocks higher in the coming quarters, I believe. Let’s take a closer look.
Alimentation Couche-Tard stock
Alimentation Couche-Tard (TSX:ATD.B)(TSX:ATD.A) could be one of the most attractive TSX stocks to buy today. The company has a large chain of convenience and fuel retail stores in 26 countries and territories. Its stock is currently trading at $51.21 per share with 18% year-to-date gains as it has surged by 12.4% in the ongoing quarter alone.
In the fourth quarter of its fiscal 2021, Couche-Tard’s revenue growth trend turned positive after declining in the previous four quarters in a row. The company registered 26.3% year-over-year (YoY) growth in its Q3 revenue to US$12.2 billion. Gradually lifting restrictive social measures, improving food segment demand, and higher fuel margins helped Couche-Tard post stronger earnings growth.
Its adjusted earnings in the April quarter rose by nearly 11% YoY — beating analysts’ earnings estimates by nearly 23%. Interestingly, it was the fifth consecutive quarter when the company continued to post positive earnings growth despite facing COVID-19-related headwinds.
Also, Couche-Tard’s management seems to have increased its focus on new acquisitions lately that could help the company achieve stronger financial growth in the long term. I expect continuously reopening economies to drive more traffic to Couche-Tard stores in the coming quarters and drive its stock higher.
NFI Group stock
NFI Group (TSX:NFI) is a Winnipeg-based bus and motorcoach maker that’s eyeing the fast-growing demand for mass mobility around the world. I find its focus on zero-emission mobility and smart mobility solutions quite interesting and futuristic. The company currently has a market cap of $2.2 billion as its stock trades around at $31.54 per share.
In August so far, NFI Group stock has surged by more than 16% as its latest quarterly results showcased a significant financial recovery. In the June quarter, the company registered a 75% YoY rise in its revenue. Consistently improving demand helped NFI report adjusted earnings of US$0.12 per share.
With this, it crushed analysts’ estimates of US$0.03 loss per share by a wide margin. While COVID-19 related headwinds are still hurting NFI Group’s overall business growth, it highlighted encouraging signs of market recovery in its latest quarterly report.
A consistent recovery could help the company post strong financial recovery in the coming quarters — much sooner than expected. That’s why you may want to add this one of the best Canadian stocks to your portfolio, which is trading with 31% year-to-date gains right now.
As always, Motley Fool investors are already gaining big from the ongoing market rally. They can add some rallying and fundamentally strong stocks like Couche-Tard and NFI to their portfolio right now to get even higher returns on their investment in the long run.
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 ALIMENTATION COUCHE-TARD INC. The Motley Fool recommends NFI Group. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.