My 3 Favourite TSX Stocks Right Now

I favour reliable TSX stocks like Hydro One Ltd. (TSX:H) as well as potentially high-reward stocks like Park Lawn Corporation (TSX:PLC).

| More on:
edit Businessman using calculator next to laptop

Image source: Getty Images.

Canadian markets enjoyed a rebound in the second half of July, recouping some of the losses it has suffered since the spring season. Unfortunately, experts and analysts have continued to warn of the rising odds of a recession in Canada. This reality is something I’m keeping in mind when picking out my favourite TSX stocks in the final days of August. I’m going to seek out equities that offer dependability as well as an opportunity for big long-term growth.

This is one of my favourite TSX stocks for its dependability

The utilities sector suffered the smallest losses on a day that saw the S&P/TSX Composite Index shed triple digits. Hydro One (TSX:H) is still one of my favourite TSX stocks to target, as we look ahead to the fall season. This Toronto-based utility boasts a monopoly in the province of Ontario. Its shares have climbed 9.7% in 2022 as of close on August 22. This illustrates its resilience in the face of broader market turbulence.

Hydro One unveiled its second-quarter (Q2) 2022 earnings on August 9. It significantly increased its capital investments and in-service additions to $612 million and $547 million, respectively, over $553 million and $300 million in the second quarter of 2021. The company posted diluted earnings per share (EPS) of $0.94 in the first six months of 2022 — up from $0.84 in the prior year.

Shares of this TSX stock currently possess a favourable price-to-earnings (P/E) ratio of 21. It offers a quarterly dividend of $0.28 per share. That represents a 3.1% yield.

Here’s a stock that has proven it can be trusted this decade

Loblaw Companies (TSX:L) is the largest grocery and pharmacy retailer in Canada. Grocery retailers proved their resilience during the COVID-19 pandemic and have continued to perform well in the face of soaring inflation. This company owns and operates subsidiaries like Fortinos, No Frills, and Shoppers Drug Mart. Shares of this TSX stock have climbed 20% in 2022 as of close on August 22.

This company released its second-quarter fiscal 2022 earnings on July 27. It posted revenue growth of 2.9% to $12.8 billion. Investors who want a better picture of a company’s profitability may want to see its EBITDA, which stands for earnings before interest, taxes, depreciation, and amortization. Loblaw posted adjusted EBITDA of $1.49 billion in Q2 2022 — up 9.3% from the prior year.

Canadian investors should be attracted to this TSX stock, as it possesses an attractive P/E ratio of 20. Moreover, it last paid out a quarterly dividend of $0.405 per share, which represents a modest 1.3% yield.

Park Lawn is one of my favourite TSX stocks for its potential

Park Lawn (TSX:PLC) is probably my favourite TSX stock of the three I’ve covered today. However, it also possesses the most risk. This Toronto-based company provides deathcare products and services in North America. The industry delivered huge growth during the COVID-19 pandemic, as death rates soared. Thankfully, those rates have dropped after the vaccine rollout. Shares of Park Lawn have plunged 31% in the year-to-date period.

In the first six months of 2022, Park Lawn delivered net revenue growth of 11% to $159 million. Meanwhile, adjusted net earnings fell 2.7% to $17.8 million. This was largely due to a decline in activity due to the falling death rates. That said, the deathcare industry is still positioned for strong growth due to North America’s steadily expanding senior population. Park Lawn is well worth buying on the dip in late August.

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 Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Investing

A worker drinks out of a mug in an office.
Dividend Stocks

1 Dividend Stock to Buy if the Bank of Canada Keeps Cutting Rates 

This dividend stock is sure to benefit from ongoing cuts in the key interest rate and is already seeing some…

Read more »

ETF chart stocks

2 Canadian ETFs to Buy and Hold Forever in Your TFSA

I personally own both of these S&P 500 Index ETFs. Here's why.

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

How Much Cash Do You Need to Quit Work and Live Off Dividend Income

Toronto-Dominion Bank (TSX:TD) pays a lot of dividend income. Can you live off of it in retirement?

Read more »

Retirees sip their morning coffee outside.

Retirees: 2 TSX Dividend Stocks That Have Raised Payouts for Decades

These top TSX dividend stocks now have 7% yields.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Tuesday, June 25

Besides Canada’s consumer inflation report, the latest U.S. consumer confidence data will remain on TSX investors’ radar today.

Read more »

An analyst uses a computer and dashboard for data business analysis and Data Management System with KPI and metrics connected to the database for technology finance, operations, sales, marketing, and artificial intelligence.
Dividend Stocks

Invest $10,000 in This Dividend Stock for $1,398.40 in Passive Income 

This dividend stock offers a whopping 11.9% dividend yield right now, with returns that should fly high for this cyclical…

Read more »

top TSX stocks to buy
Top TSX Stocks

Could This Undervalued Stock Make You a Millionaire One Day?

Looking for an undervalued stock you can buy today and hold for decades? Here's a great pick with a generous…

Read more »

An airplace on a runway
Stock Market

With Revenue Rising, Is Air Canada’s Sputtering Stock Finally Cleared for Takeoff?

Down 58% from all-time highs, Air Canada stock trades at a discount to consensus price target estimates in June 2024.

Read more »