The year ahead is highly unpredictable. We have no idea if the economic recovery will be as strong as we expect. Meanwhile, there’s plenty of debate about the pace and extent of inflation in 2022. Looking for stocks to buy now is relatively tricky.
Nevertheless, here are my top three picks for stocks that could prove to be more profitable (or at least less risky) than the rest of the stock market.
Best tech stock to buy now
Topicus (TSX:TOI) is an excellent tech stock to buy right now. Europe’s tech sector hasn’t seen the flood of capital we’ve experienced in North America. Niche software firms across the continent are relatively undervalued. Topicus is trying to build a software conglomerate by relentlessly acquiring these small, niche firms.
So far, the model seems to be working. Topicus stock has doubled since its initial public offering (IPO) In February 2021. According to its latest quarterly report, revenue was up 54% year-on-year. Much of that revenue growth was driven by acquisitions, but the company also registered 8% organic growth in sales in this recent quarter.
If this pace continues, Topicus could outperform its parent company in 2022.
Best energy stock to buy now
Tourmaline Oil (TSX: TOU) looks like one of the best energy stocks to buy right now. Oil prices have rebounded at an epic pace since last year. During the height of the pandemic, a barrel of crude oil was trading for less than zero. Now, the tables have dramatically turned and a barrel is trading over US$80 — the highest since the energy market crash in 2015.
Tourmaline is an obvious winner. The company has seen its oil production cash flow increase substantially. However, the real winner was its natural gas segment. Natural gas prices have outperformed oil over the past year and Tourmaline’s operations are more focused on this segment.
That’s helped the company expand dividends and even declare a special dividend last month.
Tourmaline stock is up 162% over the past 12 months, but the stock is still undervalued. It’s trading at just 9.6 times earnings per share right now. This could be an excellent stock to buy if you expect energy prices to remain elevated throughout 2022.
Best value stock to buy now
The best value stock to buy right now, in my opinion, is Alimentation Couche-Tard (TSX:ATD.A)(NYSE:ATD.B). North America’s largest convenience store and gas station chain has been sitting on a growing pile of cash ($3.5 billion) for the past few years. The management team has attempted several mega-acquisition deals that have fallen through.
If management can successfully secure a deal, it will certainly unlock value for shareholders over the long run. However, if they can’t, they may decide to return cash to shareholders in the form of an expanded dividend. The dividend could be at least 10 times higher than its current level given Couche-Tard’s dividend payout ratio of 10%.
Currently trading at just 15.7 times earnings per share, ATD stock is an ideal target for value investors right now.
