This Top TSX Stock Just Became a Must-Buy in October

ATCO (TSX:ACO.X) is a solid TSX stock that looks like it could be a fantastic buy after a recent announcement for October 2021.

| More on:
Mature financial advisor showing report to young couple for their investment

Image source: Getty Images

Motley Fool investors likely know it can be hard to figure out what’s valuable and what’s not. While you can certainly take fundamentals into consideration for a top TSX stock, there is so much more to look at. The future outlook and historical performance provide clues, but really there is no telling what Mr. Market is bound to do in the near and distant future.

But for some companies, growth is practically guaranteed. This comes from solid industries that are set to explode in the near term that will likely remain strong for the long term. One such industry I would consider is the construction sector. If you find a diversified company, this can be your ticket to greatness. And that’s what I’m going to focus in on today.

Fairly valued…for now

ATCO (TSX:ACO.X) is a top TSX stock I would consider, even though it remains in fairly valued territory as of writing. Shares of the stock are up 17% year to date but have fallen by about 6% in the last three months. There was initial excitement that the end of the pandemic would mean the start of future growth projects. And that’s true! But then the excitement waned, providing further opportunity.

During the most recent quarter, ATCO announced earnings were higher than predicted. Its adjusted earnings were up 14% year over year, coming largely from work under a 15-year contract in Puerto Rico’s electricity and transmission distribution system. There was also work that positively impacted earnings in Australia.

Furthermore, the TSX stock saw multiple awards for further contracts. This includes a $13 million contract from the B.C. government, a supply contract for mining in Nunavut, and several energy awards or joint ventures that should bring in years of revenue.

So why the hold-up?

Why aren’t Motley Fool investors getting in on this TSX stock? Analysts believe the stock will continue to perform well, along with the rest of the sector. But recent news puts that into question, especially ahead of earnings.

ATCO announced another investment in the energy sector, but this time it will be moving to clean energy. The top TSX stock acquired the rights to build two solar installations in Calgary, creating the largest solar installation in a major urban centre in Western Canada.

This is only one of the latest acquisitions for solar projects. The company is looking to the future while it has support from growth at present in the energy sector. That will be in large part from solar.

Foolish takeaway

And that’s why this is a solid TSX stock to buy for Motley Fool investors. It has the future well in hand, while the present is supported by growth. Shares are set to continue to climbing, even during this market volatility. So now is a solid time to pick up the stock during a slight pullback in the overall market.

With a P/E ratio of 22, EV/EBITDA of 10.7, and P/B of 1.2, it’s almost a value stock. Plus you get the added bonus of a 4.34% dividend yield! So I would pick up this top TSX stock and never let go as you continue to take in cash.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Coronavirus

Aircraft Mechanic checking jet engine of the airplane

Air Canada Stock Fell 5% in November: Is it a Buy Today?

Air Canada (TSX:AC) stock saw remarkable improvements during its last quarter but still dropped 5% with more recession hints. So,…

Read more »

Airport and plane

Is Air Canada Stock a Buy Today?

Airlines are on the rebound. Does Air Canada stock deserve to be on your buy list?

Read more »

A patient takes medicine out of a daily pill box.

Retirees: 2 Healthcare Stocks That Could Help Set You up for Life

Healthcare stocks offer an incredible opportunity for growth for those investors who look to the right stocks, such as these…

Read more »

sad concerned deep in thought

Here’s Why I Just Bought WELL Health Stock

WELL Health stock (TSX:WELL) may be a healthcare stock and a tech stock, but don't let that keep you from…

Read more »

healthcare pharma

WELL Stock: The Safe Stock Investors Can’t Afford to Ignore

WELL stock (TSX:WELL) fell 68% from peak to trough, and yet there's no good reason as to why. So now…

Read more »

telehealth stocks
Tech Stocks

The Ultimate Growth Stock to Buy With $100 Right Now

After climbing 600%, this growth stock is now down 68%. But it won't be long before other investors catch on.

Read more »

consider the options

Is Now the Perfect Time to Buy Cineplex Stock (TSX:CGX)?

Cineplex stock is significantly undervalued as it's shunned by investors. Yet, the business is showing great strength.

Read more »

A stock price graph showing declines
Dividend Stocks

Here’s Why I’m Confident About Investing Through the Down Market

There is no bear market in history that has not been followed by a bull cycle. Rather than fret over…

Read more »