The 3 Best Canadian Stocks to Buy in October 2021

Looking for a way to win from the supply chain crunch in 2021? Here are three of my favourite Canadian logistics stocks to buy this October!

| More on:
edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.

Image source: Getty Images

Canadian stocks hit a snag in September, but the TSX Index has been nothing but bullish in October. Once again, the TSX is back up near all-time highs (again) this year. Traditionally, the fourth quarter is pretty good for stocks, so the setup looks decent for the rest of the year.

Despite lots of bearish sentiment, I still think the stock market offers some great opportunities. That is especially true for those willing to be patient and to own stocks as investments for the long term. If you have some capital to deploy, here are three top transportation-focused Canadian stocks that should do very well now and for a decade ahead.

A top Canadian value stock

Last week, Canadian Pacific Railway (TSX:CP)(NYSE:CP) hit a bit of a snag when it reported third-quarter results. Both the top line (revenues) and the bottom line (earnings per share) missed due to weak volumes from Canadian grain shipments and broader supply chain issues.

Despite, this Canadian stock continued to climb actually. CP faced a frustrating quarter, but it can largely be considered a temporary blip. It still maintained its earnings outlook for 2021. Management remained very bullish on its prospects going forward. This is especially true in light of its potential takeover of Kansas City Southern Railway.

Its combined network could be a major solution to some of the broader North American supply chain issues. CP is already one of the best operators in the industry. Give it a North America-wide rail/logistics networks, and it is primed for years of solid earnings-per-share growth ahead.

A top Canadian airline to own for the decade

Keeping supply chain as a theme, Cargojet (TSX:CJT) could be an interesting Canadian stock right now. Under $200 per share, Cargojet trades 5% below a six-month high hit in early September. However, it could have very solid results in the third quarter.

With ports congested and shipping delays across the globe, Cargojet could be an ideal choice for customer looking for chartered expedited bulk deliveries. Certainly, many of its costs have risen due to inflation (fuel and parts), yet it generally passes much of those onto its customers.

Factors like e-commerce and same-day/next-day delivery continue to rise, so this will be a positive tailwind for years ahead. Its expansion into international routes could also be an entirely new growth driver. With an enterprise-to-EBITDA ratio of 16 times, this Canadian stock does not look overly expensive. With a market cap of $3.4 billion, this top airline still has a lot of room to grow ahead.

A top logistics-focused tech stock

If you believe the supply crunch could persist for longer than most hope, Descartes Systems (TSX:DSG)(NASDAQ:DSGX) should be a key beneficiary. It provides cloud-based software solutions that streamline logistics processes for suppliers, shippers, freighters, and couriers. It has been seeing a very strong rise in demand for its products across the supply chain.

Since its services are absolutely essential to operations, the company captures a high (nearly 90%) stream of recurring revenues. In its most recent quarter, revenues, earnings per share, and adjusted EBITDA rose over last year by 25%, 125%, and 35%, respectively. It is enjoying really solid organic growth right now.

This company earns very high margins and produces a lot of free cash flow. It has $128 million of cash available, so it looks primed to invest in new acquisitions as well. Despite a pretty high valuation, it is still one of my favourite Canadian tech stocks for 2021.

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 Robin Brown owns shares of CARGOJET INC. and DESCARTES SYS. The Motley Fool owns shares of and recommends CARGOJET INC.

More on Stocks for Beginners

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Growth Stocks I’m Buying in April

These three growth stocks are up in the last year, and that is likely to continue on as we keep…

Read more »

Growth from coins
Dividend Stocks

1 Grade A Dividend Stock Down 11% to Buy and Hold Forever 

If you're looking for the right dividend stock at the right price, you're going to want to consider this insurance…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Stocks for Beginners

3 TFSA Hacks That Could Make You a Millionaire

Do you want a $1 million without worrying about the tax bill? These TFSA hacks could help you become a…

Read more »

Early retirement handwritten in a note
Stocks for Beginners

These 2 TSX Growth Stocks Could Help You Retire Early

Buying these two TSX growth stocks can help you retire early by multiplying hard-earned savings in the long run.

Read more »

Technology
Stocks for Beginners

The Best Stocks to Invest $1,000 in Right Now

Want a great starter portfolio? Here’s a list of the best stocks to invest $1,000 in right now for long-term…

Read more »

green energy
Energy Stocks

1 Magnificent TSX Dividend Stock Down 37% to Buy and Hold Forever

This dividend stock has fallen significantly from poor results, but zoom in and there are some major improvements happening.

Read more »