Earlier this week, the Federal Reserve announced to keep its benchmark interest rates unchanged. It was the second consecutive time the central bank has decided to keep rates unchanged. The announcement has improved investors’ sentiments, thus driving equity markets. Meanwhile, the S&P/TSX Composite Index is up around 4% in the last two days of trading. Amid the improving optimism, here are three Canadian stocks that I am bullish on.
Source: Getty Images
WELL Health Technologies
WELL Health Technologies (TSX: WELL) is a tech-enabled healthcare company that provides front and back-office management software applications to physicians to run their businesses. As of June 30, the company had around 3,200 healthcare providers and clinicians as its clients. It had approximately one million patient visits in the second quarter.
Meanwhile, WELL Health has continued its strategic acquisitions by acquiring Seekintoo and Proack Security last month, which would safeguard its patient health information. The company launched “WELL AI Decision Support” last month, which would aid healthcare providers in improving early diagnosis of diseases. These growth initiatives could continue to drive its financials in the coming quarters.
However, amid the weakness in the broader equity markets, WELL Health had lost 21% of its stock value in the last three months. Meanwhile, the company has witnessed a healthy buying this month, with the company’s stock price rising 4% in the first two days of trading. Despite the rise, it still trades at an attractive NTM (next 12-month) price-to-earnings multiple of 11.7, making it an attractive buy.
Canadian Natural Resources
Investors were worried that the Federal Reserve of the United States could raise interest rates amid solid third-quarter GDP (gross domestic product) numbers, hurting global growth and the oil demand. However, with the central banks in the United States and the United Kingdom keeping their benchmark interest rate unchanged, oil prices have increased in the last two days. Meanwhile, higher oil prices could benefit oil-producing companies, such as Canadian Natural Resources (TSX: CNQ).
Yesterday, the company reported its second-quarter performance, with its production increasing by 4% amid record oil and natural gas production. Despite higher production, its adjusted EPS (earnings per share) and adjusted fund flows declined by 16.3% and 10%, respectively. Lower realization prices compared to the record prices in the previous year’s quarter dragged its financials down. Meanwhile, the company has made capital investments of $4.29 billion in the first three quarters, which could continue to boost its production and financials in the coming quarters.
Further, CNQ’s management has raised its quarterly dividend by 11% to $1.00/share. It was the 24th consecutive increase by the company. Its forward dividend yield stands at 4.29% while the company trades at 10.3 times analysts’ projected earnings for the next four quarters. Considering all these factors, I am bullish on CNQ.
Savaria
My final pick is Savaria (TSX: SIS), which reported its third-quarter performance on Wednesday. Its revenue grew by 4.3% to $210.1 million amid solid organic growth of 4.1%. During the quarter, its accessibility segment posted a revenue growth of 4.8%, while the revenue from its patient care segment grew by 2.4%. Also, its gross margin improved from 31.8% to 34.5%. Amid top-line growth and expansion of gross margin, the company’s adjusted net income increased by 7.8%. Also, the company lowered its leverage ratio by raising around $92 million through public offerings.
After reporting its third-quarter earnings, Savaria’s management has reconfirmed its 2023 guidance of 8-10% of revenue growth and 16% of adjusted EBITDA margin. The company has also stated that it is confident of achieving $1 billion in revenue in 2025. Amid its solid third-quarter performance, the company’s stock price rose over 6% yesterday. Despite the surge, it still trades 1.6 times its book value and pays a monthly dividend with a forward yield of 3.92%. Considering all these factors, I believe Savaria would be an excellent buy this month.
