Canadians who have the appetite to invest in stocks should do so if finances allow. The amount of capital is relative because money grows when you know how to pick the right stocks. A $300 investment can buy you shares in stocks on the TSX with strong fundamental businesses. Two top options right now are Sierra Wireless (TSX: SW)(NASDAQ: SWIR) and Boston Pizza Royalties Income Fund (TSX: BPF-UN).
The respective businesses are easy to understand, so you won’t be investing blindly. More importantly, neither stock is a mediocre performer. And both are outperforming the broader market. The tech stock is up 75.8% year to date, while the royalty stock’s positive return is 11%. You can allocate $150 to each stock and earn two ways, from price appreciation and dividends.
Top tech performer
Technology (-30.54%) is the second-worst performing sector thus far in 2022 after health care (-47.87%). Sierra Wireless is an exception because of the nature of the business. The $1.5 billion company provides internet-of-things (IoT) and enterprise solutions, essential needs in today’s connected economy. Sierra Wireless trades at $39.20 per share.
Sierra’s business is thriving, as evidenced by its impressive top- and bottom-lines in Q2 2022. In the three months ended June 30, 2022, consolidated revenues (IoT and enterprise) increased 41.5% versus Q2 2022. Net earnings reached US$12.6 million compared to a US$9.32 net loss in the same quarter last year.
Management notes the strong demand for connected devices globally, particularly among industrial customers. The gross margin in IoT solutions increased 30.1% year over year due to price increases, the product mix, and improved absorption of fixed costs from increased volume.
On the enterprise segment, demand was strong for routers in Sierra’s key industrial and public safety verticals. As a result, revenue increased 13.6% year over year to US$48.3 million. Companies need IoT and enterprise solutions to improve operational efficiency, create better customer experiences, and improve their business models. This demand should help create new revenue streams.
Steady amid the uncertainties
Boston Pizza is a no-frills investment. The $357.5 million royalty income fund earns revenue based on the franchise system sales of Boston Pizza restaurants (383) in the royalty pool. This dividend stock trades at only $16.61 per share, but pays a mouth-watering 7.22% dividend. The yield is high following the recent 17.6% hike in monthly cash distributions.
While total revenue increased 50.5% in the first half of 2022 versus the same period in 2021, net and comprehensive income declined 24.1% year over year to $14.67 million. Because of the strong cash flow from operating activities in Q2 2022, the distributable cash flow grew 53.4% to $6.2 million versus Q2 2021. The latest data shows that royalty and distribution income in July 2022 increased 6.1% versus July 2021.
Management disclosed that the impact of the global pandemic on the restaurant industry was sudden, unexpected, and unprecedented. However, despite the prevailing market uncertainties, Boston Pizza has been steady through most of 2022 and is even beating the market.
Higher returns
Sierra Wireless and Boston Pizza aren’t among the popular stocks on the TSX. However, stock investing isn’t a popularity contest. Smart investors pick companies that can endure headwinds and deliver higher returns.
