Earlier this week, Statistics Canada announced that Canada’s inflation rose 2.8% in February, lower than analysts’ expectation of 3.1% and declining from 2.9% in January. The United States Federal Reserve has indicated about three rate cuts this year, raising investors’ optimism and boosting equity markets. Year to date, the S&P/TSX Composite Index is up 5.2%. Amid growing investors’ confidence, you can buy the following three no-brainer stocks.
Waste Connections
Waste Connections (TSX:WCN) is a solid waste management company operating in the United States and Canada. It is growing its footprint through strategic acquisitions. The company operates in exclusive or secondary markets, thus facing less competition and enjoying higher margins. Supported by these strong financials, the company has returned over 570% in the last 10 years at a CAGR (compound annual growth rate) of 21%.
Meanwhile, the Toronto-based waste management company has expanded its asset base by acquiring 30 energy waste treatment and disposal facilities from Secure Energy Services last month. These acquisitions can contribute $300 million in annual revenue together. The company is investing in Renewable Natural Gas (RNG) and resource recovery facilities and is constructing two recycling facilities that could become operational this year.
Given its growth initiatives, WCN’s management expects revenue and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) to grow this year by 9.1% and 13.4%, respectively. The management also projects its EBITDA margin to expand 120 basis points compared to 2023. Given its solid underlying businesses and healthy growth prospects, Waste Connections is an excellent buy right now.
Docebo
Docebo (TSX:DCBO) offers a highly customizable enterprise learning management system that helps businesses improve their engagement, productivity, and customer connections. The company is trading 9.5% higher this year amid solid fourth-quarter performance. Its revenue during the quarter increased by 27% to $49.3 million amid an expanded customer base and higher average contract value. The company has added 365 customers compared to its previous year’s quarter, while the average contract value has increased by 11.7%.
Amid top-line growth, its adjusted EBITDA grew 180% to $6.5 million, while its adjusted EBITDA margin expanded from 5.8% to 13.2%. Meanwhile, I expect the uptrend in its financials to continue amid growing demand for e-learning platforms. Its expanding customer base and increasing average revenue per user could support its financial growth. For the first quarter of 2024, Docebo’s management expects its revenue to be between $51 million and $51.3 million, with the midpoint representing a 31.5% growth. The management also expects its adjusted EBITDA margin to improve from 6% in the previous year’s quarter to 12.5-13.5%. Considering all these factors, I believe Docebo would be an excellent buy.
goeasy
goeasy (TSX:GSY) is another top stock I am bullish on due to its solid performance and healthy growth prospects. The company witnessed $705 million in loan originations in the December-ending quarter, a 12% increase from the previous year’s quarter. The company experienced solid performances across multiple product and acquisition channels amid strong demand, driving its loan originations and expanding its loan portfolio. By the end of the quarter, the company’s loan portfolio stood at $3.65 billion, representing a 30% year-over-year growth.
goeasy witnessed stable credit and payment performance during the quarter, leading to a 20 basis point reduction in its net charge-off rate to 8.8%. Also, its allowance for future credit losses declined from 7.37% to 7.28%. Its efficiency ratio, which measures how well the company is able to control its overhead expenses, decreased by 390 basis points to 28.3%. Amid the solid operating performance, its adjusted EPS (earnings per share) increased by 32% to $4.01.
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Further, goeasy’s management expects its loan portfolio to expand to $5.8-$6.2 billion by 2026, with the midpoint representing a 64% increase from its 2023 levels. The midpoint of its 2026 revenue guidance represents an annualized growth of 12.9%. Despite its healthy growth prospects, the company trades at an attractive next-12-month price-to-earnings multiple of 9.9 and offers a forward dividend yield of 2.8.
