The Canadian economy could be in a spot to cool off over the coming quarters. Indeed, recession fears have been well known for quite some time. In any case, Canadian investors shouldn’t stand by, waiting for the recession to pass before investing. I think markets are beginning to shrug off the macro headwinds en route to what ultimately may be a very “soft landing” for the economy at the hands of central bank rate hikes. Heck, the rate things have been going, a recession may be narrowly avoided.
For investors, it can pay dividends to pay attention to the companies that have continued to grow earnings in spite of the numerous economic challenges. At the end of the day, strong management teams can mean the difference in navigating an economic contraction gracefully.
In this piece, we’ll look at two promising earnings growers that I’d be inclined to praise as “Canadian all-star stocks.” Indeed, growth, even in hard times, ought to come at a premium multiple. And at this juncture, I don’t think such a premium exists. So, without further ado, let’s check in with the following names to help grow your portfolio in what could be a rockier second half for equities.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX:ATD) is floating around its all-time high of around $68 per share following its latest quarterly earnings beat.
For its fourth quarter, the company blew away the numbers on the bottom line, with $0.71 earnings per share (EPS), topping expectations of $0.49. That’s a huge beat that helped propel shares higher. Despite the positive post-earnings reaction, I believe the gains in the stock have been relatively modest. Admittedly, I’m a bit surprised the stock didn’t break $70 per share after such a strong number.
In any case, I think the muted, albeit still positive, reaction is an opportunity for long-term investors seeking earnings growth at a reasonable price. At writing, the stock trades at 16.6 times trailing price-to-earnings.
With strong long-term momentum behind the stock, continuously rising profits, and more merger and acquisition potential, ATD stock stands out as one of my top picks for the second half. It’s not only a top performer; it ought to be on the TSX’s all-star team!
Constellation Software
Constellation Software (TSX:CSU) is another company that’s steadily beaten the market over the past few years. Amid the tech selloff, CSU shares felt some turbulence. But ultimately, the stock recovered very quickly, hitting new highs in a matter of months. Today, shares are at new heights, just north of the $2,800 mark.
Indeed, Constellation recently clocked in a big earnings beat of its own. Though shares are now quite pricy at 88.5 times trailing price to earnings, I think it’s just a matter of time before CSU is worth $3,000 per share. It’s a great company, with brilliant managers that know how to fire on all cylinders.
Recently, Constellation Software was recently touted as one of the best-positioned Canadian tech stocks by RBC Capital Markets. I’m in agreement. Constellation is a winner that will probably continue to post winning results for investors!
