As we approach mid-August, earnings season is now well underway for Canadian stocks. And, as usual, this is one of the most important times of the year for investors to get an idea of how the top Canadian stocks have been performing and which investments may be worth a buy at their current valuations.
Earnings season always provides investors with significant information to digest, but it’s especially important this year, considering all the headwinds in the economy that stocks must navigate in the current environment.
Therefore, finding the companies that have been performing well in this environment is not just ideal for stocks to buy now, but there’s also a strong possibility that these top performers are some of the highest-quality stocks to buy and hold long term.
If you’re looking for top stocks that have continued to perform well, even with surging inflation last year and rapidly rising interest rates over the last couple of years, here are two of the best Canadian stocks to buy now.
A top Canadian real estate stock to buy now
After an impressive earnings report for its second quarter of 2013, InterRent REIT (TSX:IIP.UN) is reminding investors why it’s one of the top Canadian stocks to buy now while it trades so cheaply.
The residential real estate investment trust’s (REIT’s) second-quarter earnings clearly showcased strong apartment demand and moderating operating costs leading to a major jump in profitability.
In fact, InterRent’s same-property net operating income (SPNOI) jumped 15% year over year in the second quarter — the highest the company has seen since 2018 and well above the roughly 10% it’s averaged over the last four quarters.
The increase in SPNOI was due to both an uptick in occupancy year over year to 95.4% and a 6.5% increase in its average monthly rent to $1,523. And with same-property expenses beginning to moderate, as the inflation rate comes under control, InterRent saw a substantial 3% increase in operating margins, up to 66.3%.
Given the fact that InterRent is both defensive and offers significant growth potential, plus the fact that it’s trading undervalued, makes it one of the best Canadian stocks to buy now.
Currently, InterRent stock is trading at a forward price-to-funds from operations (P/FFO) ratio of 21.9 times. That’s well below its five-year average P/FFO ratio of 26.9 times.
While you can still buy InterRent undervalued, it’s certainly one of the best Canadian stocks to consider adding to your portfolio.
A top Canadian blue-chip stock
Another high-quality Canadian stock to buy now after it just posted impressive earnings is Thomson Reuters (TSX:TRI), a global media powerhouse known for delivering news and offering a wide slate of professional tools.
Its recent second-quarter earnings for 2023 results show not only consistent organic revenue growth but also an earnings before interest, taxes, depreciation and amortization (EBITDA) margin of 40.1%, which notably outpaced estimates of 38.2%. This significant improvement in margins helped Thomson Reuters beat analysts’ estimates for both its EBITDA and earnings per share (EPS).
Its adjusted EPS came in at $0.84, significantly ahead of the $0.76 consensus estimate. Furthermore, its consolidated EBITDA was $662 million, which was also well ahead of the $627 million consensus estimate from analysts.
These impressive results remind investors how recession-resilient a stock like Thomson Reuters is. The stock’s operations are well diversified, and much of its revenue is recurring, helping to mitigate a tonne of risk.
Therefore, although there is still so much uncertainty in the economic environment, it’s not surprising to see that Thomson Reuters continues to believe it can grow sales throughout 2023 by over 3% and see its organic revenue growth rise to more than 5%.
So, if you’ve been looking for a top Canadian stock to buy now that you can have confidence holding should a recession materialize, Thomson Reuters is one of the best investments to consider today.