The S&P/TSX Composite Index has risen by nearly 2% (+360.4 points) from month-end February 2023, and the momentum should continue if the Bank of Canada does not announce a rate hike this month.
Three names stand out if you’re looking to buy stocks that are moving ahead of the recovering market. Stantec (TSX:STN), Bombardier (TSX:BBD.B), and Payfare (TSX:PAY) are outperforming the broader market and are up by 23% or more year to date.
Stantec delivered record financial results and solid performance in 2022 to the delight of investors. The $8.9 billion international professional services company is a global leader in sustainable engineering, architecture, and environmental consulting.
In the year that ended December 31, 2022, gross revenue and net income rose 24% and 23.1% versus $5.7 billion and $247 million, respectively, versus full-year 2021. For Q4 2022, net income soared 342.8% year over year to $73.5 million. For 2023, management expects net revenue to grow between 7% and 11%.
President and CEO, Gord Johnston, said, “I am extremely pleased that we outperformed our revenue and earnings guidance for 2022 on the strength of our outstanding fourth-quarter performance.” He adds, “Stantec is well positioned for another year of solid growth.”
The industrial stock trades at $79.82 per share (+23% year to date) and pays a modest 0.78% dividend. The Board recently approved an 8% increase in the cash dividend. Purchase Stantec shares before the ex-dividend date on March 30, 2023. Based on market analysts’ forecasts, the price could hit a high of $93 in 12 months.
Visible growth on the horizon
Another name on the mend is Bombardier. The $6.5-billion global leader in aviation designs, manufactures and services the world’s most exceptional business jets. At $69.06 per share, investors are up 32.1% thus far in 2023. In Q4 fiscal 2022, total revenues climbed 49.9% to US$2.7 billion versus Q4 2021, while net income increased 1.3% year over year to US$241 million.
Management expects to continue outpacing revenue growth in 2023 due to expanding margins. It also projects aircraft deliveries to reach 138 units compared to 123 last year. The significant expansion of the service centre network and recruitment of skilled technicians are also important growth drivers.
Payfare, in the financial technology space, is flying high with its 43.8% year-to-date gain. Market analysts recommend a buy rating with a 12-month average price target of $13, a potential 110.7% increase from $6.17. The current share price is 63.7% higher than the 52-week low of $3.77.
The $288.8 million company powers the gig economy and provides digital banking solutions for the gig workforce. Large gig platforms like DoorDash, Lyft, and Uber are its partners. On December 7, 2022, active users reached one million, a significant milestone, and it represents 95% growth (+488,288 active user additions) over year-end 2021.
Management has yet to present the full-year 2022 results, although its guidance is 205% revenue growth versus 2021. CEO and founding partner, Marco Margiotta, said it was an exceptional year for the business.
Out of the slump
Due to the bullish market sentiment, Stantec, Bombardier, and Payfare could soar higher in 2023. The stocks could reward investors with better short-term returns than others that remain in a slump.