July could see some recovery in the stock market after two straight months of dip. The initial signs of growth are already visible as some stocks picked up momentum in the last week of June. Now is a good time to buy shares of Dividend Aristocrats and growth stocks at a discount. Here are my top stock picks for July.
BCE stock
After falling 10% in the last two months, BCE (TSX: BCE) stock started gaining momentum on June 26. BCE announced layoffs as it is scrapping low-income segments like radio to focus on income-generating segments like cloud services. The company has been a favourite of dividend lovers with over 50 years of dividend history. It continues to add new subscribers and grow its revenue while it expands its 5G network.
The company has a healthy dividend yield of 6.4% and is likely to keep growing dividends at a 5% average annual rate for the coming years. Now is a good time to add more BCE shares to your portfolio and lock in a higher yield.
Magna stock
Magna International (TSX: MG) is an automotive components supplier, which also provides contract manufacturing to automakers and tech companies making automobiles. The stock has been trading lower since February on weak earnings. But the momentum is picking up as the headwinds that surrounded the automotive industry are easing. The semiconductor supply shortage that created pent-up orders eased. Magna’s first-quarter sales surged 11% in the first quarter. The company expects growth in the second half, which could see a pick-up in momentum and drive the stock up 18-20%.
This stock could also see long-term growth, as it is early to pick on the trend of contract manufacturing in automotive. As cars become more complex and get faster product upgrades, the cost will become a challenge, leading the way for Magna’s contract manufacturing sales.
CT REIT
After falling over 10% in the last two months to the point of being oversold, CT REIT (TSX: CRT.UN) stock picked up momentum in the last week of June. The stock fell, as the U.S. Fed hiked interest rates in May, and the Bank of Canada also did so in June. Higher interest rates increase mortgage costs and negatively impact property prices. But CT REIT’s distributions are not much affected by interest rate, as it increased its annual distribution by 3.5%, payable from July 2023 to June 2024.
Unlike other real estate investment trusts (REITs), CT earns over 90% of its rent from its parent Canadian Tire. Canadian Tire will continue to pay rent as it is a tax-deductible expense for the retailer. You can buy the REIT while it trades close to its 52-week low and lock in a 6% distribution yield.
Nuvei stock
Payments platform provider Nuvei’s (TSX: NVEI) stock picked up momentum on June 26 after falling 37% since May. The stock fell, as it became the target of short-seller Spruce Point Capital, which released a report around Nuvei’s exposure to the bankrupt crypto exchange FTX. But the short-seller has exited its position in Nuvei. The stock is now gaining momentum as Bitcoin prices pick up. Moreover, the second half is seasonally strong for Nuvei as it earns a major portion of its revenue from e-commerce volumes.
Nuvei would also realize significant volumes from enterprise clients, as it takes advantage of its recently acquired Paya’s enterprise resource planning integration solutions. Nuvei stock could surge 30-60% in the second half, as it realizes seasonal growth and merger synergies.
Investing tip
You might already own these stocks. But you can add more of them to your portfolio, as they trade at an attractive price. The four stocks will diversify your July investments across different sectors and give you growth in the second half of the year.
