Last month, the Canadian equity markets were volatile amid the fear of an escalation in the Red Sea crisis, continued Isreal-Palestine conflict, and solid fourth-quarter GDP (gross domestic product) numbers in the United States. Meanwhile, I expect the volatility to continue in the near term amid the expectation of a global economic slowdown due to the impact of monetary tightening initiatives. So, I believe it is prudent to balance your portfolio with a growth stock, a dividend stock, and a defensive stock right now.
Nuvei (TSX:NVEI) would be my first pick, given the growing popularity of digital transactions and the company’s growth initiatives. The growth in e-commerce has expanded the adoption of digital payments, thus creating a multi-year growth potential for the company. The company is launching innovative products, expanding its APM (alternative payment methods) portfolio, and making strategic partnerships, which could drive its customer base and financials in the coming quarters.
Amid the favourable market conditions and growth initiatives, the company’s management expects its topline to grow at an annualized rate of 15-20% over the next few years. Despite its healthy growth prospects, Nuvei trades 2.5 times its projected sales for the next four quarters and 12 times its earnings for the next four quarters. Also, it pays a quarterly dividend of $0.10/share. Considering all these factors, I believe Nuvei would be an excellent growth stock to have in your portfolio.
Waste Connections (TSX:WCN), a defensive stock that offers solid waste management services, would be my second pick. The company has expanded its footprint across the United States and Canada through strategic acquisitions and organic growth, thus driving its financials. Supported by these solid numbers, the company has delivered total shareholder returns of around 560% in the last 10 years, outperforming the broader equity markets.
Meanwhile, given its solid underlying business and healthy growth prospects, I expect the uptrend in its financials and stock price to continue. The company is working on acquiring 30 energy waste treatment and disposal facilities in Western Canada, which can contribute $300 million to its total revenue. It has 12 renewable natural gas and resource recovery facilities and two recycling facilities under construction. The two recycling facilities could become operational this year. So, its growth prospects look healthy.
Pizza Pizza Royalty
My final pick is monthly dividend-paying stock Pizza Pizza Royalty (TSX:PZA), which operates Pizza Pizza and Pizza 73 brand restaurants. It has adopted a highly franchised business model, collecting royalty from franchisees based on their sales. So, it generates stable and predictable financials, irrespective of the economic outlook. It continues to witness solid same-store sales growth this year amid new product launches and promotional activities.
Meanwhile, the company intends to pay all the available cash to its shareholders. However, its payout ratio stands at 97%, as the company hopes to smoothen its dividend payouts amid seasonal variations. Its dividend yield currently stands at a healthy 6.38%. Further, the company’s plans to expand its restaurant network and renovate its old restaurants could continue to drive its financials in the coming quarters. Besides, it trades at an attractive next-12-month price-to-earnings multiple of 16, making it an excellent buy at these levels.