Three under-the-radar stocks are compelling investment options for growth or dividend investors. The companies are well positioned for a major comeback in 2024 if it hasn’t begun yet.
Durable organic growth
Technology will likely be the top-performing sector in 2023. As of this writing, the year-to-date gain is 55.08%. A highly profitable constituent, Computer Modelling Group (TSX: CMG), has a market-beating return of 68.76% but could fly higher in 2024.
The $777 million software technology company provides the energy industry with reservoir simulation software and related services. In the first half of fiscal 2024 (six months ending Sept. 30, 2023), revenue and net income increased 27% and 59% year over year to $43.38 million and $13 million, respectively.
CMG’s chief executive officer (CEO), Pramod Jain, said the goal is to establish durable organic growth over the long term. This tech stock ($9.45 per share) is a rare gem, paying a decent 2.08% dividend.
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Inevitable comeback
Crescent Point Energy (TSX:CPG) is in positive territory (+1.53% year to date) as 2023 comes to a close. If you invest today ($9.45 per share), you can partake in the attractive 4.29% dividend. This $5.34 billion oil & gas company produces light oil in southern Saskatchewan and central Alberta.
The comeback of this energy stock is inevitable. On Dec. 21, 2023, Crescent Point announced the completion of the acquisition of Hammerhead Energy. Besides the portfolio transformation, Crescent Point’s president and CEO Craig Bryksa said the strategic transaction enhances the long-term sustainability of the business.
Hammerhead, an oil and liquids-rich Alberta Montney producer, should likewise increase the excess cash flow per share by approximately 20% within a five-year plan. Crescent Point expects to generate around $950 million of excess cash flow for the full year 2023.
Bryksa said Crescent Point will focus on continued operational execution, balance sheet strength and increasing the return of capital to shareholders in 2024. Management plans to increase the base dividend by 15% annually and declare it in early 2024.
Strong buy rating
Air Canada (TSX: AC) has flown under the radar too long that market analysts expect the stock of Canada’s flag carrier to rise to prominence in 2024. The 12-month average price target in their “strong buy” rating is $29.75, a 59% jump from its current share price of $18.73.
Management is slowly growing the airline, improving operational stability, and returning to profitability. In the third quarter (Q3) of 2023, Its president and CEO, Michael Rousseau, said Air Canada performed strongly in Q3 2023, as evidenced by the financial results.
In the three months ending Sept. 30, 2023, operating income rose 120% year over year to $1.41 billion. Notably, net income reached $1.25 billion compared to the $508 million net loss in Q3 2022. Passenger revenues climbed to $1.04 billion, or 22% higher than a year ago. At the quarter’s end, liquidity was healthy at $10 billion.
Management admits that Air Canada is prone to the global industry’s headwinds. However, because of the stable demand environment, the business should finish strong in 2023 and do well next year. The company looks forward to summer 2024 as it boosts its network capacity and meets projected high demand.
Bright business outlooks
Computer Modelling Group is a no-brainer buy for investors looking to earn two ways on the TSX: capital appreciation and dividends. However, Crescent Point Energy and Air Canada deserve consideration for their bright business outlooks.
