2 Canadian Stocks to Buy That Could Be Massive Long-Term Winners

Robust stocks like Waste Connections (TSX: WCN) could win, despite the economy.

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This is the perfect time to pick long-term winners in the ongoing bear market. Here are my top picks for 2023 and beyond!

Winner #1

Waste Connections (TSX:WCN) continues to outperform the overall market thanks to a resilient and essential core business. Waste management is absolutely essential, regardless of the prevailing economic situation. The stock is up by more than 3% while the TSX Index is down by about 5% this year.

Waste Connection remains a solid pick amid the turmoil in the market due to the nature of its business. The company provides non-hazardous waste collection services in the U.S. and Canada. It also offers transfer disposal and resource recovery services. Given that there will always be a waste, the company will always record business owing to demand for its services.

The company delivered solid third-quarter results. Revenues was up to $1.88 billion — a 17.7% year-over-year increase. Adjusted earnings landed at $1.10 a share, increasing 23.6% year over year. The company has since raised its full-year guidance, signaling expected strong growth for the next year. Full-year revenue is expected at $7.19 billion, up from the previous guidance of $7.12 billion.

The stock trades at a price-to-earnings multiple of 24 — a justified valuation for a robust business. The stock even has a vote-of-confidence from Bill Gates, who owns a stake worth $290 million. Canadian investors can’t go wrong with this pick. 

Winner #2

Toromont Industries (TSX:TIH) is another robust industrial stock. However, it has underperformed the wider market this year. The stock has lost 11% in market value year to date. In contrast, the TSX is only down by about 5%.

The company’s core business — selling, renting, and servicing mobile equipment for Caterpillar — could be affected by high inflation and the economy plunging into recession.

Nevertheless, Toromont reported a solid third quarter. Revenue in the quarter was up 14% year to date to $142.4 million, driven by an 11% increase in equipment sales. Product support revenues were up 19% on increased demand as rental revenues grew 13%

Toromont ended up posting a 26% increase in operating income as net earnings increased 31% year over year to $29.4 million. Backlogs as of the end of the third quarter stood at $1.4 billion compared to $1.1 billion as of the same period last year. The high backlog signals strong order activity.

The impressive financial results and solid cash position underscore why Toromont is still a Dividend Aristocrat at a time when most companies are conserving capital. The 1.54% dividend yield isn’t particularly exciting but is certainly reliable. 

The stock currently trades at a price-to-earnings multiple of 21. Toromont is an exciting pullback play for dividends amid solid underlying fundamentals. Investors looking for a safe place to park their cash should add this stock to their watch list. 

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 Vishesh Raisinghani has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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