In investing, the name of the game is discipline, patience, and timing. These are key attributes of a successful investing strategy. In this article, I will discuss three Canadian stocks to buy as we wait for the next bull market.
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Why invest now?
Well, the TSX index is 7% lower than 2022 highs. Some stocks, in particular, are significantly lower. As their valuations have deflated, opportunities have arisen. The patient investor would have stood aside in 2022, waiting for lower valuations. The disciplined would act now even though it feels dangerous. And those who look for the right timing would know that this is not a perfect science. The absolute bottom can be impossible to predict. Thus, being in the vicinity of the bottom is good enough.
So, valuations today are far more reasonable than last year. And although the market looks like a much scarier place, it seems like a good idea to buy into the fear. Here are three quality Canadian stocks to position yourself for the next bull market. These companies have strong cash flows, strong balance sheets, and bright futures.
Altagas
Altagas Ltd. (TSX: ALA) is a very interesting Canadian stock that gives investors a great balance of safety and upside. You see, half of Altagas’ business is in the utilities sector, which is regulated. The other half of the business is in the midstream energy sector. This business includes natural gas gathering and processing assets, as well as natural gas export terminals. These terminals support Altagas’ global export platform.
Both of these businesses have shown strong growth rates in recent years. This has driven the company’s 230% revenue growth in the last five years to $14 billion. Also, Altagas was able to improve its balance sheet and grow its dividend nicely to become a top Canadian dividend stock. In fact, the dividend sits 53% higher today compared to five years ago. Yet, Altagas stock has fallen 7.4% over that same timeframe.
So, when a bull market arrives, I have no doubt that Altagas stock will climb higher.
Suncor Energy
Despite the noise that has followed Suncor Energy Inc. (TSX: SU) around in the last few years, this Canadian stock remains a story of operational and financial success. In fact, the company has an impressive return on equity (ROE) of 24%, and it posted cash flow growth of 33% in 2022 to $15.7 billion.
To top that off, Suncor stock is yielding a very generous 5.2%, making it a top Canadian dividend stock. Also, it’s currently very cheap. In fact, Suncor trades at a price-to-cash flow multiple of a mere 2.9 times (compared to 3.4 times for its peer group). It’s clear to me that Suncor stock is the underdog today. But this is undeserving, as Suncor is an oil and gas powerhouse, with a well-diversified business and strong and steady cash flows.
For example, 2022 was a record year for Suncor. Also, in the last 20 years, Suncor stock’s dividend has increased at a compound annual growth rate of 17%.
Well Health Technologies
While Well Health Technologies Corp. (TSX: WELL) is definitely in an industry that we would describe as defensive, it is by no means without its risks. You see, Well Health is an emerging player that’s shaking up the healthcare industry with its digital solutions. So, it’s a young company, and that, in and of itself, poses risks.
But results have been consistently strong over the last few years. Last quarter, the company reported a 47% increase in revenue to $145.8 million – a record. This was driven by acquisitions and an 18% organic growth rate. Strong patient engagement hit a record, and virtual services soared 191%. All of this led to management raising guidance for the fourth consecutive quarter.
Today, Well Health stock is 38% lower than it 2021 highs.
