The Canadian equity markets have rebounded strongly amid easing inflation, with Canada’s inflation rising by 2.8% in June. It was the lowest increase since March 2021, with a sharp decline in gasoline and telecommunications services expenses. However, food prices and mortgage expenses remained on the higher side.
Meanwhile, the lower-than-expected inflation numbers appear to have increased investors’ confidence, driving the S&P/TSX Composite Index higher by 6.3% from June lows. Amid improving investor confidence, here are three top TSX stocks that you can buy in August.
WELL Health Technologies
WELL Health Technologies (TSX:WELL) focuses on developing technologies and services that aids healthcare professionals in offering omnichannel services to their patients. Its platform includes both front- and back-office management software applications. Supported by its strategic acquisitions and strong organic growth, the company continues to drive its financials. In the March-ending quarter, WELL reported 34% growth in revenue while its adjusted net income grew by 58.4%.
Meanwhile, I expect the uptrend in the company’s financials to continue propelled by its acquisitions and growing adoption of telehealthcare services. Recently, the company acquired CarePlus Management, which provides recruitment and billing services in the United States. As a result of the acquisition, the company raised its 2023 revenue guidance by $50 million to $740–$760 million. WELL trades at 1.4 times analysts’ revenue expectation for the next four quarters, making it an attractive buy.
Canadian Natural Resources
Supported by a demand recovery in China and production cuts by Saudi Arabia and OPEC+ (Organization of the Petroleum Exporting Countries), oil prices have bounced back strongly over the last few days. Brent crude prices increased by over 14% in July to around US$84/barrel. Besides, analysts look bullish on oil, with Goldman Sachs issuing a 12-month projection price of US$93/barrel for Brent crude. So, higher oil prices could benefit oil-producing companies, such as Canadian Natural Resources (TSX:CNQ).
The oil and natural gas producer is looking at strengthening its production and has planned to invest around $5.2 billion this year, which could increase its output by 70,000 barrels of oil equivalent per day. So, increased production and higher prices could boost its financials in the coming quarters. Meanwhile, the company has repaid some of its high-yielding loans to lower its net debt to $11.9 billion. Management has adopted a strategy to return 100% of its cash flows to shareholders once its net debt falls below $10 billion. So, CNR is well-equipped to continue with its dividend growth.
CNQ stock has raised its dividends consecutively for 23 years at a CAGR (compound annual growth rate) of 21%, with its forward yield currently at 4.49%. Considering all these factors, I believe CNQ would be an enticing buy this month.
Another beneficiary of growing investor confidence, goeasy (TSX:GSY) witnessed healthy buying last month, as its stock price rose by 15%. Despite the recent increase, it is down around 40% compared to its 2021 highs. GSY is trading at 9 times analysts’ projected earnings for the next four quarters, which looks cheap considering its growth prospects.
With the Canadian government intending to lower the maximum allowable interest rate to an annual percentage rate (APR) from 47% to 35%, the company is enhancing its products, pricing, and cost structures to minimize the impact. Also, its new products and expansion into new markets could drive loan originations, thus expanding its loan portfolio.
The company’s management expects its loan portfolio to grow by 70% from its current levels to reach $5.1 billion by the end of 2025. It also hopes to deliver over 21% return on equity annually over the next three years. Besides, it also pays a quarterly dividend of $0.96/share, with its yield at 3.02%.