The global equity markets have been volatile since the beginning of this year. The concerns over the projected slowdown in global growth this year and the recent comments from Federal Reserve Governor Christopher Waller that the bank could slash its benchmark interest rate at a slower pace than Wall Street’s expectations weighed on investors’ sentiments, dragging the equity markets down. Meanwhile, the S&P/TSX Composite Index is down around 0.9% this year.
Amid the volatile environment, investors should look for a balanced portfolio by adding a growth, defensive, and high-yielding dividend stock. Meanwhile, here are my three picks.
Nuvei
Nuvei (TSX: NVEI) would be an excellent growth stock to have in your portfolio, given its solid quarterly performances, high-growth prospects, and attractive valuation. In the third quarter, announced in November, the company reported revenue and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of 55% and 36%, respectively. The growth across its three distinct sales channels boosted its financials.
Meanwhile, the secular shift towards digital transactions has been expanding the addressable market for Nuvei. Besides, the company’s expanded APM (alternative payment methods) portfolio, new product launches and geographical expansion could allow it to expand and deepen its footprint while also increasing its customer base. The Montreal-based fintech company recently opened a new office in China to expand its footprint in the Asia-Pacific. It has partnered with Microsoft to grow its presence in the Middle East and Africa. So, its growth prospects look healthy.
Further, Nuvei trades at an attractive valuation, with its price-to-earnings and price-to-book multiples at 11 and 1.6, respectively. So, I believe Nuvei would be a worthwhile buy despite an uncertain outlook.
Dollarama
Dollarama (TSX: DOL), a defensive stock with a tilt toward growth, would be my second pick. The discounted retailer has been growing its revenue and net earnings at a CAGR (compound annual growth rate) of 11.3% and 17.5%, respectively. The company increased its store network from 652 to 1,541 during this period. Despite its aggressive expansion, the discount retailer has improved its EBITDA (earnings before interest, tax, depreciation, and amortization) margin from 16.5% to 31%.
Through its superior direct sourcing and buying capabilities, the company is able to offer products at compelling value to its customers, driving its same-store sales. Besides, its cost-effective growth-oriented business model, lean operations, and efficient logistics have improved its margins. Meanwhile, the company plans to add 60 to 70 stores yearly, raising its store count to 2,000 by 2031. Besides, its subsidiary Dollaracity expects to add 470 stores over the next five fiscal years. Considering its growth prospects and solid underlying business, I am bullish on Dollarama despite the volatility.
Pizza Pizza Royalty
Pizza Pizza Royalty (TSX: PZA) is a top monthly paying dividend stock to have in your portfolio due to its stable cash flows and high dividend yield. The company operates Pizza Pizza and Pizza 73 brand restaurants through franchises. It collects royalties from them based on their sales. So, its financials are immune to price rises and wage inflation. The pizza franchise has posted solid same-store sales amid new product launches, effective value messaging, and promotional activities this year.
Backed by its solid financials, the company raised its monthly dividend three times last year. With a monthly dividend of $0.775/share, PZA stock currently offers an impressive forward yield of 6.27%. Given its healthy same-store sales and continued restaurant expansion and renovation plans, I believe Pizza Pizza Royalty is well-positioned to continue paying dividends at a healthier rate. Besides, its NTM (next 12 months) price-to-sales multiple stands at 0.7, making it an attractive buy.
