The Toronto Stock Exchange had a strong performance in March and robust first quarter in 2024. Besides the 3.76% month-on-month gain, Canada’s main stock index closed at a new all-time on March 28, 2024, marking a second straight quarterly gain.
Market analysts attribute the advance to looming interest rate cuts, a tailwind for stocks. Unfortunately, some stocks underperformed or have been left behind by the bullish market. However, if you have the investment appetite this April, three are strong buys right now.
Record annual revenue
MTY Food Group (TSX: MTY) has lagged in the last three months. At $48.71 per share, the restaurant stock is down 13.4% year to date. However, based on market analysts’ 12-month average price target ($61.50), the upside potential is 26.3%. The overall return in one year should be higher if you factor in the 1.99% dividend.
This $1.2 billion company from Saint-Laurent is a franchisor and operator of restaurant concepts under different brands globally. “MTY delivered a remarkable financial performance in fiscal 2023 on the strength of record results across the board,” said Eric Lefebvre, CEO of MTY.
Notably, MTY’s annual revenue in 2023 exceeded $1 billion for the first time in its history. In the fiscal year ended November 30, 2023, revenue, net income, and free cash flow (FCF) increased 63.2%, 39.12%, and 12.52% to $1.2 billion, $104 million, and $154.1 million, respectively, compared to fiscal 2022.
Well-positioned for growth
At $2.04 per share (-20.3% year to date), Chorus Aviation (TSX: CHR) trades at a bargain. The turnaround could come soon following the impressive financial results in Q4 and year-end 2023. For the year, operating revenue and net income increased 5.3% to $1.7 billion versus 2022, while net income soared 104.4% year over year to $106.1 million.
The $394.6 million holding company owns regional airlines Jazz Aviation LP and Voyageur Airways and Chorus Aviation Capital, a lessor in global aviation. Its President and CEO, Colin Copp, forecasts strong FCF in 2024 and notes that Chorus is well-positioned for growth.
Best-ever net income
Calfrac Well Services’ (TSX: CFW) year-to-date loss is 6% ($4.20 per share) but should generate investors’ interest following a solid financial and operational performance in 2023. The $360 million company provides specialized oilfield services to exploration and production companies. It operates throughout Western Canada, the United States, and Argentina.
In the 12 months ending December 31, 2023, revenue rose 24% to $1.9 billion compared to 2022. Net income climbed 460% year over year to $197.6 million, Calfrac’s best-ever annual net income.
Notably, the $1.5 billion revenue generated by the North American division is one of the best financial results in the company’s history. The full-year revenue of Argentinian operations increased 36.2% to $341.9 million from a year ago. Management expects customer demand for its services to improve in Q1 2024.
This year, deploying five large fracturing fleets and six coiled tubing units in Canadian operations should deliver consistent financial results with those of the prior year.
Slump will end
The policymakers will meet on April 10, 2024, followed by the Bank of Canada’s interest rate announcement. While an immediate cut is still doubtful, it will come soon. Meanwhile, MTY, Chorus Aviation, and Calfrac could catch up and end their slump with the impending tailwind.
