Canadian stocks seem back on the path of a handsome recovery after witnessing a downside correction in the second quarter of 2023. Early signs of easing inflationary pressures are raising hopes that the central banks in Canada and the United States might pause interest rate hikes, leading to a rally in growth stocks. This could be one of the key reasons why the TSX Composite Index has risen 4.8% in the last 25 sessions to above the 20,500 level. Given that, it could be the right time for investors to add some fundamentally strong TSX stocks to their portfolios.
In this article, I’ll highlight two of the best TSX stocks you can consider buying this summer.
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Celestica stock
Celestica (TSX: CLS) has been one of the top gainers on the Toronto Stock Exchange lately, as it has rallied 42.3% in July so far, extending its year-to-date gains to about 79.4%. If you don’t know it already, it’s a Toronto-based firm that primarily focuses on designing and manufacturing hardware platforms and provides supply chain solutions to businesses. The company currently has a market cap of $3.3 billion as its stock trades at $27.37 per share.
CLS stock’s spectacular gains in 2023 are supported by its solid financial growth trends. Last week, Celestica announced its upbeat second-quarter financial performance, which encouraged its management to raise the full-year 2023 outlook. During the quarter, the company’s total revenue rose 12.9% year over year to US$1.9 billion. More importantly, its adjusted quarterly profit jumped 22.9% from a year ago to US$66.6 billion.
While many businesses in recent years have struggled due to high inflation and COVID-19-related challenges, Celestica has been beating Street analysts’ earnings estimates for 16 consecutive quarters. Given its consistent business growth, the recent gains in this TSX stock could just be the start of a long-term rally.
Nutrien stock
Nutrien (TSX: NTR) could be another attractive TSX stock to consider this summer. It’s a Saskatoon-headquartered crop inputs and services provider with a market cap of $44.6 billion as its stock currently trades at $89.65 per share with about 9.3% year-to-date losses.
After witnessing nearly 24% value erosion in May 2023 due mainly to the negative impact of geopolitical and weather-related challenges on the global agriculture commodity markets, NTR stock has been on the path to a steady recovery in the last couple of months. Since the end of May, Nutrien’s share prices have recovered by more than 25%.
Although high volatility in global commodity markets and other macroeconomic challenges may continue to affect Nutrien’s business growth in the short term, Street analysts expect its financial growth trend to significantly improve next year, as these temporary challenges gradually subside.
To be honest, Nutrien’s financial growth trends in the recent quarters don’t look too impressive, as it’s gearing up to announce its second-quarter results later this week on August 2. Nonetheless, its strong balance sheet and consistently growing demand for its services and agricultural chemicals makes its long-term growth outlook look bright. Also, NTR’s annualized dividend yield of 3.1% makes it even more attractive to buy on the dip, especially for long-term investors seeking passive income.
