The Canadian stock market has shown signs of strength this year but does not have much to show after eight months. The S&P/TSX Composite Index has surged 5% or more three times this year already. Yet the index is barely positive in 2023.
The market as a whole has struggled this year to rebound after a very disappointing performance in 2022. However, there have been plenty of individual TSX stocks that have delivered market-crushing returns in 2023. Many of those stocks may still be trading below all-time highs, but there is momentum to be bullish about.
I’ve reviewed three top Canadian stocks that are all currently trading more than 20% below all-time highs. All three are proven winners that I strongly believe are only dealing with short-term headwinds.
If you’ve got time on your side, now could be an incredibly opportunistic time to load up on these three Canadian stocks.
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Stock #1: goeasy
Valued at a market cap of only $2 billion, goeasy (TSX: GSY) may not be a household name amongst all Canadian investors. When it comes to market-beating returns, though, there aren’t many stocks that can compete with goeasy’s track record over the past decade.
The consumer-facing financial services provider has unsurprisingly seen demand take a hit in this high interest rate environment. That slowdown in demand partially explains why the stock is down close to 40% from all-time highs set in late 2021.
Even with the recent pullback, though, shares are still up a market-crushing 130% over the past five years.
This is not a growth stock that goes on sale often. Investors will want to act fast if they’re hoping to take advantage of this discount.
Stock #2: Toronto-Dominion Bank
The banking sector as a whole has been struggling since early 2022. The continued fears of a recession are perhaps one reason why bank stocks have not been able to return to all-time highs. Additionally, the high interest rate environment raises the risk of the bank’s customers not being able to meet their debt obligations.
We haven’t seen the Canadian banks trading at these valuations since the COVID-19 market crash. It certainly could be an opportunistic time for long-term investors to put some cash to work.
Toronto-Dominion Bank (TSX: TD) remains one of the top Canadian banks for me. In addition to the discounted price, the second-largest of the Big Five provides its shareholders with long-term growth potential from its U.S. operations.
And while investors patiently wait for TD Bank to return to all-time highs, there’s a juicy 4.5% dividend yield to enjoy.
Stock #3: Brookfield Renewable Partners
Speaking of underperforming sectors, renewable energy stocks haven’t fared much better than the banks in the past couple of years.
Anyone that’s bullish on the long-term rise in demand for renewable energy would be wise to have a green energy leader like Brookfield Renewable Partners (TSX: BEP.UN) on their watch list today.
Brookfield Renewable Partners is a global leader with exposure to a range of different areas within the renewable energy space.
Shares are down more than 40% since the beginning of 2021. Still, Brookfield Renewable Partners has managed to more than double the returns of the broader Canadian stock market. And that’s not even including the company’s dividend, which is currently yielding above 5%.
