The Bullish Market Left These 3 Stocks Behind, but They’re Buys Right Now

Three stocks that underperformed during the bullish market could break out next following their impressive financial results in 2023.

| More on:
stock market

Image source: Getty Images

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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends MTY Food Group. The Motley Fool has a disclosure policy.

More on Investing

A person builds a rock tower on a beach.
Dividend Stocks

CPP Pension: Boost Your Payouts by $5,232 per Year

You can raise your after-tax CPP by making RRSP contributions. Alimentation Couche-Tard (TSX:ATD) is a good RRSP stock.

Read more »

Overhead shot of young adults using technology at a table
Tech Stocks

1 Stock That’s Just as Hot as Tesla Stock  (Without All the Hype)

Sure, Tesla stock (NASDAQ:TSLA) has the headlines, but this other stock has far more growth, with even more on the…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

3 No-Brainer Stocks to Buy With $20 Right Now

Here are three no-brainer stocks that are suitable for anyone getting started on their investing journey.

Read more »

Bank Stocks

Could Royal Bank Stock Reach $200?

Growing rate cut hopes and improving analysts’ expectations from Royal Bank’s financial results could help its stock maintain strong upward…

Read more »

A plant grows from coins.

3 Growth Stocks to Buy With $3,000 for the Next 3 Years

These growth stocks have the potential to deliver above-average returns and compound investors’ wealth.

Read more »

Young woman sat at laptop by a window

Here’s Why I Think Restaurant Brands Is 1 of the Best Bets on the TSX Today 

Here's why Restaurant Brands (TSX:QSR) could be one of the best stocks to buy for long-term upside in this current…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

This 5% Dividend Stock Pays Cash Every Month

This monthly dividend stock offers cash every month, but also returns that continue to climb higher from being in a…

Read more »

growing plant shoots on stacked coins
Dividend Stocks

3 Top Dividend Stocks That Keep Raising Their Payouts

These three TSX stocks are ideal buy as they consistently raise their payouts, depicting their healthy financials.

Read more »