The 4 Best TSX Stocks With Solid Upside

These TSX stocks delivered stellar returns in the recent past and could continue to rise further.

| More on:
data analytics, chart and graph icons with female hands typing on laptop in background

Image source: Getty Images

Despite the uncertainty related to COVID-19, a recovery in consumer demand and an improved operating environment suggest that the Canadian stock market could continue to trend higher. 

TSX stocks that delivered stellar returns in the recent past could continue to rise further, reflecting favourable industry trends, market share growth, and investment in growth initiatives.

With continued growth in the backdrop, I am bullish on Shopify (TSX:SHOP)(NYSE:SHOP), Bank of Montreal (TSX:BMO)(NYSE:BMO), Cargojet (TSX:CJT), and Docebo (TSX:DCBO)(NASDAQ:DCBO). 

Let’s dig deeper to ascertain what could drive these stocks higher.

Shopify

Shopify has created a significant amount of wealth for its investors, reflected through a 6,100% appreciation in its price since it listed on the exchange. Moreover, the accelerated shift towards omnichannel platforms led to a stellar rally in its stock in 2020. Despite the appreciation and its expensive valuation, I see further upside in Shopify stock. 

I expect Shopify to gain from the continued shift towards e-commerce platforms. Moreover, its market share could rise further, reflecting benefits from its growth initiatives. 

The continued momentum in its business, higher adoption of its merchant solutions, new products, high-growth sales and marketing channels, and global expansion augur well for growth and will likely drive its merchant base. Meanwhile, its strong fulfillment network, structural shift in selling models, and operating leverage could further support its growth.

Bank of Montreal

Bank of Montreal stock is another exciting growth play for investors. Its high-quality earnings, ability to drive loan volumes, and solid deposits base support the uptrend in its stock. Moreover, its strong credit performance and efficiency improvements cushion its profitability and support higher dividend payments. 

While Bank of Montreal stock has gained quite a bit in the recent past, I expect it to continue to deliver stellar returns in 2021 and beyond, owing to its solid growth catalysts and improving economic environment. 

I believe Bank of Montreal’s diversified business mix, improved credit demand, and operating leverage could support its revenues and earnings growth. Furthermore, its solid credit quality, strong balance sheet, higher economic activities, and rise in interest rates could accelerate its growth further and drive its future dividend payment. Also, Bank of Montreal’s valuation suggests that it’s still within investors’ reach, which is encouraging. 

Docebo

Thanks to its solid annual recurring revenues and rising customer base, Docebo stock has delivered triple-digit returns since listing on the TSX in October 2019. While I believe the company’s growth could moderate with the normalization in demand in the post-pandemic era, it still has solid long-term growth prospects.

I believe this corporate e-learning platform provider could continue to rise higher due to the continued growth in OEM sales, higher average order value, and increased customer base. Meanwhile, improved productivity savings and operating efficiency will likely cushion its profitability. Further, its large addressable market, new OEM contracts, higher retention rate, and large deal size bode well for future growth and could drive Docebo’s stock price higher.

Cargojet

Cargojet has delivered stellar returns over the past several years and has performed exceptionally well during the pandemic owing to the surge in demand from the e-commerce and healthcare segment. Despite the slight moderation in demand, I expect it to remain elevated compared to the pre-pandemic level, which is likely to push its revenues and earnings and, in turn, its stock price.

The continued momentum in Cargojet’s core business, sustained demand from the e-commerce companies, next-day delivery capabilities, and long-term contracts position it to deliver stellar returns. Further, a high client-retention rate, international growth opportunities, and cost efficiencies will likely boost its financial performance and help it to enhance shareholders’ returns.

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.

Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CARGOJET INC., Docebo Inc., and Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify.

More on Tech Stocks

Tech Stocks

Your Future Self Will Thank You for Buying Lightspeed Stock in 2023

Here’s why you may want to add LSPD stock to your portfolio in 2023 to hold it for the long…

Read more »

a person watches a downward arrow crash through the floor
Tech Stocks

Don’t Wait for a Market Crash: These 2 Top Stocks Are on Sale

Waiting for a market crash can take away the opportunity to buy early in the market rally while growth stocks…

Read more »

Coworkers standing near a wall
Tech Stocks

What’s Next for Magnet Forensics Stock After Hitting a 52-Week High Last Week?

While TSX tech stocks have lost around 30% last year, Magnet Forensics stock has soared 82%.

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Tech Stocks

Have $500? 2 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now

Got $500 to invest? Consider buying these stocks that are too cheap to ignore.

Read more »

little girl in pilot costume playing and dreaming of flying over the sky
Tech Stocks

Got $1,000? Buy These Hot Growth Stocks Before They Take Off 

Growth stocks are best when bought at their lows or early in the rally. Now is the time to buy…

Read more »

Growing plant shoots on coins
Tech Stocks

2 Growth Stocks to Invest $100 in Right Now

Even with the market riding a bullish rebound, you don’t need a whole lot of cash to invest in growth…

Read more »

work from home
Tech Stocks

Could Lightspeed Stock Be a Big Winner in 2023?

Investors can capitalize on Lightspeed’s low valuation and benefit from the recovery in its price.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Tech Stocks

TFSA Passive Income: How I’m Investing to Make $2,000/Year From Dividends

I am increasing my dividend income by investing in dividend stocks like the Toronto-Dominion Bank.

Read more »