When it comes to investing in the Canadian stock market, investors have mostly seen a bear market since the market started crashing in 2021. There has been some good news with respect to the mining and energy industries and maybe some e-commerce, but that was not enough to pull a bull market situation.
However, since the second quarter of 2023, things are starting to look up. There might be a new bull market on the horizon. In this article, I will discuss three stocks in the spotlight that many smart investors have been eyeing for some time now. Let’s dive in and find out if they should be in your portfolio as well.
Barrick Gold
Despite average second-quarter (Q2) results, Barrick Gold’s (TSX: ABX) prospects for the second half of the year appear much stronger. The increased output from PV, Kibali, Carlin, and Cortez is expected to bolster performance.
Moreover, the company is anticipated to experience significant improvement in margins during the second half of 2023 compared to the year’s first half. This trend is expected to continue into 2024, as Barrick has been moving past the elevated capital expenditure levels seen in 2023.
As a result, Barrick appears to be one of the most promising names in the sector in terms of potential reward and risk. Additionally, the company is currently trading at an attractive valuation of approximately 6.4 times conservative FY2024 cash flow per share estimates.
The group has identified several key focus areas at present. These include leveraging its purchasing power to reduce Scope 3 emissions from suppliers, creating a tool to assess its impact on biodiversity conservation and regeneration, and supplying ESG (environmental, social, and governance) raters with up-to-date, sustainability-related data.
Additionally, the group is actively focusing on environmental and social aspects for the Reko Diq project in Balochistan, Pakistan. Notably, it has already surpassed its community development commitments well ahead of the targeted first production in 2028.
West Fraser Timber
With a market cap exceeding US$8.5 billion, West Fraser Timber (TSX: WFG) stands as one of Canada’s largest lumber stocks and dominates North America’s lumber market, commanding 10% of a fragmented industry. Its diverse portfolio encompasses lumber, engineered wood products (EWP), pulp & paper, and European divisions. Over the past decade, the company’s shares have soared by over 157%, providing investors with substantial returns, further complemented by consistent dividend payments.
A testament to its impressive performance, earnings per share have surged from a meagre U$0.90 per share a decade ago to an impressive figure of over U$27 per share in 2022. In addition to its flourishing financials, West Fraser Timber boasts a spotless balance sheet, boasting a substantial cash reserve of nearly U$1 billion compared to a mere debt of U$700 million. This financial strength positions the company favourably.
Bank of Nova Scotia
Bank of Nova Scotia (TSX: BNS) adheres to a quarterly dividend payment schedule for its common shares. Each quarter, the bank reveals the specific dividend amount, determined within a targeted percentage range. The bank conducts an annual review of its dividend policy, typically in the second quarter.
Over the past four years, spanning from 2019 to 2022, Bank of Nova Scotia has demonstrated a positive trajectory in its dividend per share. Commencing at US$3.54 in 2019, the dividend has steadily climbed to US$4.09 in 2022, highlighting the bank’s commitment to rewarding its shareholders.
Marked on July 27, 2023, Bank of Nova Scotia will disburse a dividend payout of U$1.06 per share to its esteemed shareholders, showcasing an impressive annualized dividend yield of 6.4%.
