3 Quiet TSX Stock Winners You’ll Wish You Knew About Earlier

Here are 3 TSX stocks that outperformed broader markets this year and could play well going into 2023.

| More on:
Choose a path

Image source: Getty Images

Very few TSX stocks outperformed the markets this year. That’s because record-high inflation and rising rates badly hurt equities, leading to massive value erosion. Some stayed resilient due to their economic moat and solid earnings potential. Here are three that outperformed broader markets this year and could play well going into 2023.  

Intact Financial

While markets have dropped 5% this year, Intact Financial (TSX:IFC) has returned 20%. Intact is a leading property and casualty insurer with a dominating 20% market share in Canada.

Some sectors and stocks are highly vulnerable to rate hikes and inflation. However, Intact has been relatively resilient. Its net income for the nine months that ended on September 30, 2022 came in at $2 billion, a nice 45% year-over-year growth rate. Intact also saw margin expansion in 2022 compared to last year.

Intact has enjoyed superior financial performance in the previous decade. Its scale and strong underwriting have played well, driving handsome business growth over the years. As a result, IFC stock has created immense value for shareholders and returned 15% compounded annually.

Due to its earnings predictability, Intact has increased its dividends for the last 17 consecutive years. It currently offers a stable 2% dividend yield.

North West Company

North West Company (TSX:NWC) is a $1.8 billion retailer operating in Northern Canada, Western Canada, rural Alaska, and the Caribbean areas. It is a slow-but-stable growing company that has returned 15% this year.      

The company reported a 24% drop in earnings in the latest quarter, mainly due to higher inflation and changes in its product sales blend. The stock saw some recovery recently after tumbling on poor quarterly numbers in September.

Note that earnings visibility stands tall in uncertain markets. It drives stable value creation for shareholders. We have seen this in the case of NWC. The stock currently yields 4%, higher than TSX stocks. In the last 10 years, it has returned 10% compounded annually, notably beating broader markets.

Athabasca Oil

Small-cap TSX energy stocks have remarkably outperformed their large-cap peers in the last few years. Consider Athabasca Oil (TSX:ATH). ATH has returned 140% in 2022 and nearly 1,900% since the pandemic.

Like many other oil and gas producers, Athabasca Oil saw stellar earnings growth in the last few quarters. However, apart from earnings growth, the bigger value creation happened due to its massive deleveraging. Net debt declined from ~$175 million last year to $47 million as of Q3 2023.

Even if oil prices have come down significantly in the last few months, they are still higher than their historical trend. So, energy producers like Athabasca will likely continue to see steep financial growth next year as well. Moreover, such windfall gains will mostly go towards debt repayments, ultimately strengthening its balance sheet.

ATH stock is trading 20% lower from its all-time highs in June this year. Its current valuation and earnings growth prospects could drive considerable value creation.

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.

The Motley Fool recommends INTACT FINANCIAL CORPORATION and THE NORTH WEST COMPANY INC. The Motley Fool has a disclosure policy. Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned.

More on Stocks for Beginners

Young woman sat at laptop by a window
Stocks for Beginners

3 Stocks Beginners Can Buy in 2023 and Hold for Decades

Are you looking for a simple portfolio to get started as an investor? These three stocks are top performers and…

Read more »

railroad
Dividend Stocks

Slow and Steady: Buy this Railroad Stock Now to Win the Race

Investors looking for a solid and growing income should pick up shares in this railroad.

Read more »

A brown bear sitting on a rock
Stocks for Beginners

Where to Invest $10,000 in a Bearish Market

Here are some great options for low-risk and high-risk investors alike.

Read more »

retirees and finances
Dividend Stocks

RRSP Investors: Should You be Worried During a Recession?

RRSP savers might feel like gagging as they watch their investments fall, but stay strong! Especially with these TSX stocks.

Read more »

Businessperson's Hand Putting Coin In Piggybank
Stocks for Beginners

How I’d Build a TFSA if I Had to Start Over

Are you looking to start a TFSA? Here’s how I would build one if I had to start over.

Read more »

Stocks for Beginners

3 Top Stocks to Buy Now in a Once-in-a-Decade Opportunity

Don't wait. These three top stocks are the perfect additions to your portfolio and aren't likely to remain at these…

Read more »

retirees and finances
Dividend Stocks

How to Create a Million-Dollar TFSA in Two Decades

Your TFSA could create riches you didn't know were possible, but only if you commit again and again to your…

Read more »

Coworkers standing near a wall
Stocks for Beginners

2 Unassailable Earnings Growth Stocks for a Wobbly Economy

Aritzia and another top growth stock that could be hot performers through 2023 and beyond.

Read more »