The TSX Is Down, But These 2 Stocks Are Beating the Market

Despite the dismal performance of the TSX in 2022, certain stocks have been thriving, such as natural gas producer Tourmaline.

| More on:
Hand arranging wood block stacking as step stair with arrow up.

Image source: Getty Images

We’re heading toward the end of 2022 and are faced with the grim reality that the S&P/TSX Composite Index has faltered. With a year-to-date return of 12%, many of us have lost a lot of money. So, we need stocks that are beating the market. The market in 2022 has not given us an acceptable return. Luckily, I have a couple to talk about here.

Please read on, as I go through two top stocks that have gone against the trend, racking up nice gains so far in 2022.

Tourmaline: Handily beating the TSX Index

As Canada’s largest natural gas producer, Tourmaline Oil (TSX:TOU) is in a sweet spot right now. The simple fact is that natural gas is in high demand globally, yet in short supply. North American natural gas is the most abundant and reliable. It’s also the cheapest and cleanest natural gas available. In addition to this, the North American natural gas market has finally been opened up to the world, and exports are rapidly accelerating. It’s now a global market made possible by the export of liquified natural gas (LNG).

These positive industry fundamentals are being reflected in Tourmaline’s results and Tourmaline’s stock price. In the second quarter of 2022, Tourmaline reported a 137% increase in its operating cash flow. This gave rise to the company issuing a special dividend of $2 per share, which is to be paid out over and above its regular dividend of $0.90 per share. In the trailing 12-month period, Tourmaline paid out $6.28 in dividends. This represented a trailing dividend yield of approximately 9%.

If that’s not enough, let’s take a look at Tourmaline’s stock price performance in 2022 — it’s actually up 81%. Despite the fact that Tourmaline is a cyclical company, there’s a global energy crisis, and this gives me confidence in Tourmaline stock’s worth. Natural gas is in high demand, and it shows no signs of letting up.

Waste Connections: A strong 2022 with a steady and consistent growth profile

As one of the largest integrated solid waste services companies in North America, Waste Connections (TSX:WCN) also has a bright future. It provides waste collection, disposal and recycling services in the U.S. and Canada. Waste Connections stock has also outperformed the market, as it’s thriving as it consolidates the very fragmented waste market.

In addition to the opportunity that Waste Connections has to consolidate the industry, the waste industry is famously immune to economic shocks. This is one of the hallmarks of investing in Waste Connections. In today’s environment, which is all about the risk of recession, this is a must-have characteristic. It’s reflected in the company’s most recent results, which were strong, despite a difficult macro-economic environment.

Revenue for the second quarter of 2022 increased 18% to $1.8 billion. Also, cash flow from operations increased 15% to $974 million and free cash flow increased 4.4% to $602 million. These strong results are reflected in Waste Connections stock performance. It has not rallied as much as Tourmaline has in 2022, but it certainly has beat the market. It’s up 5.4% in a year when the TSX Index is down 12%, which is pretty good.

Waste Connections also has a history of solid returns — an impressive track record. Simply put, Waste Connections shareholders have benefitted from a generous return of capital program. This included dividend and share repurchases. In fact, 2022 was the 19th consecutive year of positive shareholder returns.

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 Karen Thomas owns shares of Tourmaline Oil Corp. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Investing

woman analyze data
Investing

Why I’d Buy Nvidia Stock Even at Today’s Prices

Nvidia’s dominant position in the AI space and the ongoing demand for its GPUs suggest that the stock’s upward trajectory…

Read more »

stock analysis
Dividend Stocks

1 Dividend Superstar I’d Buy Over TD Bank Stock

TD (TSX:TD) stock may look undervalued, but there are reasons for the price drop. Meanwhile, this dividend superstar has more…

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Wednesday, July 17

Trading just below the key psychological level of 23,000, the TSX Composite has been posting fresh record highs for four…

Read more »

A steel grain silo storage tank with solar panel in a yellow canola field in bloom in Alberta, Canada.
Dividend Stocks

Down by 26.77%: Now Might Be the Perfect Time to Buy Nutrien Stock

This TSX stock has seen share prices fall by over 26% from its 52-week highs, but it might be the…

Read more »

Woman has an idea
Dividend Stocks

2 No-Brainer Stocks to Buy Now With $7,000

Two relatively cheap cash cows are no-brainer buys for investors with $7,000 to invest.

Read more »

dividends grow over time
Dividend Stocks

Buy This High-Yield Dividend Stock in July 2024

Buy this high-yielding dividend stock to lock in inflated yield into your portfolio to generate solid passive income for years.

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Dividend Stocks

Where Will Dollarama Stock Be in 3 Years?

Dollarama stock has done incredibly well during economic uncertainty, but what about when the markets recover in the next three…

Read more »

edit Woman calculating figures next to a laptop
Tech Stocks

How to Buy UiPath Stock in Canada

UiPath is a beaten-down AI stock that trades at a massive discount to its earnings growth. Is the tech stock…

Read more »