The most successful stock market investors are those who have brought shares of quality companies and held them for several years. This strategy allows investors to benefit from the power of compounding and generate exponential returns over time.
While the stock market is volatile in the near term, the asset class has helped investors derive inflation-beating returns over the last several decades. In an environment that is quite challenging, it’s essential to identify companies with strong underlying businesses that enjoy a wide economic moat.
Here are the three best TSX stocks for you to invest $1,000 in April 2023.
Canadian Natural Resources stock
Trading at an enterprise value of $100 billion, Canadian Natural Resources (TSX:CNQ) is a TSX giant which has already returned 281% to investors in dividend-adjusted gains since April 2013.
Despite these outsized gains, CNQ stock offers investors a tasty dividend yield of 4.5% and is priced at 10 times forward earnings, which is very cheap.
Canadian Natural Resources increased production in 2022 due to its strategic investments in natural gas assets, resulting in record natural gas production for the company.
An elevated pricing environment allowed Canadian Natural Resources to report adjusted funds low of $19.8 billion and free cash flow of $10.9 billion in 2022. Its share buybacks and dividends totaled more than $10 billion in the last four quarters.
Further, CNQ also paid a special dividend of $1.5 per share last August and is on track to pay dividends of $3.6 per share to shareholders in the next 12 months.
Waste Connections stock
A recession-resistant company growing at a fair clip, Waste Connections (TSX:WCN) should be on top of your shopping list in 2023. It provides non-hazardous waste collection, transfer, disposable, and resource recovery services in Canada and the United States. These collection services are offered to residential, municipal, commercial, and exploration & production customers.
Despite rising interest rates, Waste Connections is forecast to increase adjusted earnings from $5.13 per share in 2022 to $6.5 per share in 2024, showcasing that it enjoys pricing power.
So, WCN stock is priced at 28.5 times forward earnings, which might be steep. But Bay Street expects the bottom line to expand by 14% annually in the next five years.
Waste Connections currently pays investors an annual dividend of $1.4 per share, translating to a forward yield of 0.8%. These payouts have more than doubled in the last two decades.
Well Health stock
The final TSX stock on my list is Well Health (TSX:WELL), which has already returned 4,600% to investors since its initial public offering in 2016. Currently trading 49% below record highs, Well Health stock is valued at a market cap of $1.1 billion.
Well Health reported record sales of $569 million in 2022 — an increase of 88% year over year. Its robust top-line growth enabled the company to increase adjusted earnings before interest, tax, depreciation, and amortization by 73% to $104.6 million.
In 2022, the company grew omni-channel patient visits by 50% in 2022 to 3.5 million, while total patient interactions were up 86% at 4.9 million.
Well Health expects sales in 2023 to range between $665 million and $675 million, indicating the TSX tech stock is priced at less than two times forward sales.
