TSX stocks could continue to rally, driven by solid Q3 2021 numbers. Here are three top Canadian names that could stand tall in their respective sectors.
Air Canada
I have been a long-time bull of Air Canada (TSX: AC). Though the stock has notably underperformed since June, I think it will return to glory in the next four to six quarters.
The flag carrier plans to report its Q3 2021 earnings on November 2. The Delta variant could dominate Air Canada’s topline in the upcoming results. However, it will still likely be better than Q3 2020.
Analysts expect around $1.8 billion in revenues for the quarter ended September 30, 2021. In the same period last year, AC’s revenues were $757 million.
Apart from the top-line, the company’s lower cash burn could also improve investor sentiment. Notably, Air Canada’s bottom line might remain under severe pressure for the next few quarters.
Note that AC stock has fallen almost 25% since June 2021. Its upcoming earnings could trigger the stock upwards after months of underperformance. So, this could be an excellent opportunity for long-term investors to grab it while cheap.
Lightspeed Commerce
Canada’s fast-growing POS company Lightspeed Commerce (TSX: LSPD)(NYSE: LSPD) could also be an interesting pick. The stock dropped more than 30% after the company came under attack from an activist short-seller. LSPD stock has shown a tepid recovery since last week, following an equally tepid management’s response to the short report.
Notably, we could get to hear more from the tech giant once it reports its fiscal Q2 2022 earnings on November 4. Lightspeed has been on a roll this year, particularly with its revenue growth.
If the revenue growth momentum continues and the management skillfully addresses investors’ concerns over the short report, LSPD stock could zoom to its previous highs.
Lightspeed has been aggressive on the acquisitions front lately, which has boosted its scale and geographical presence. An upbeat commentary by management about its addressable market and merchant base growth could also revive investor sentiment.
Investors should note that LSPD stock is trading at a price to sales ratio of 37 times. While that’s certainly not cheap, it’s relatively discounted after the massive correction. Despite the recent drop, LSPD is sitting on decent gains of 45% for the year. Aggressive investors can consider LSPD ahead of its quarterly earnings.
Canadian Natural Resources
The energy sector appears poised to outpace broader markets in the Q3 earnings season. Improving demand and rallying oil prices should help energy stocks. Among the Canadian energy giants, I like Canadian Natural Resources (TSX: CNQ)(NYSE: CNQ) the most. It plans to release Q3 2021 earnings on November 4.
Higher production and higher energy prices could substantially boost CNQ’s earnings. During the first half of 2021, CNQ reported $2.9 billion in net profits against a loss of $1.5 billion in the same period in 2020. Continuing the momentum, CNQ might report superior earnings and free cash flow growth in Q3 2021.
The stock has already been up 130% in the last 12 months. Higher earnings and conviction about future growth might keep the rally going.
CNQ pays a stable yield of 3.6%, higher than its peers. It could be an attractive bet for long-term investors given the handsome total return prospects.
