In 2024, the Canadian stock market has been stronger than many anticipated. The S&P/TSX Composite Index is up 6% in the year. However, many stocks have taken a recent pullback.
You can pick up some high-quality stocks at better valuations. Here’s a four-stock portfolio that I’d be buying with $10,000.
A transport stock that’s been a top TSX performer
TFI International (TSX: TFII) has been a great Canadian compounder over the past five and 10 years. Its stock is up 356% in the past five years and 850% in the past 10 years.
The company has used its efficient operating prowess and a knack for expert acquisitions to grow to become Canada’s largest freight and transportation business. It also has a growing operation in the U.S. after several major acquisitions there.
The freight market has been terrible over the past year and a half. This has been impacting TFI’s results and its stock price. Yet, TFI continues to generate strong cash and even take market share as it improves its service offering.
Overall, this company has the opportunity for a big valuation re-rate if it can execute its operational improvement strategy.
A retail stock with an international presence
Alimentation Couche-Tard (TSX: ATD) has been in a similar situation to TFI. The consumer environment has weakened and that has slowed sales at its convenience stores and gas stations. Its stock is down -8% in the past two months.
Despite this recent weakness, Couche-Tard has been a great compounder as well. It is up 100% in the past five years and 420% in the past 10 years. The company has used its scale, strong brand, and wise capital allocation to build an enviable retail network.
Its network just got bigger after it added a major European convenience portfolio. The company has a strategy to double earnings over the coming four years. You can pick the stock up at a fair valuation after the pullback.
A diversified stock at an attractive value
If you catch a trend in this article, it is growth at a fair price. Calian Group (TSX: CGY) fits this category nicely. Its returns have not been quite as good as the stocks above. However, it might just be early in its growth journey.
Calian operates a four-leg business that has a focus on healthcare, training, specialized technologies, and cybersecurity. It caters to government, institutions, and private businesses across Canada, the U.S., and Europe.
It just made a couple of acquisitions that expand its geographic, technology, and human capacity. The market has not recognized how accretive these deals might be.
The stock trades for only 12 times forward earnings. Its growth rate could double that in 2024, so it could be a good bargain today.
A real estate empire set for a rebound
Colliers International Group (TSX: CIGI) is another high-quality stock that is a little beaten up. Colliers is a global commercial brokerage company.
However, many investors don’t realize that it has significantly diversified over the past few years. Over 70% of its annual earnings come from recurring revenue sources (like property management and asset management).
Real estate transactions have stalled with interest rates remaining elevated. This segment has suffered. However, at some point real estate will need to trade and Colliers will see a wave of business. That will be a catalyst for the stock.
Colliers has a great brand and a globally diversified business. It only trades for 17 times earnings, which is a fair value for a company that has compounded by the same rate for over two decades.
