Earlier this week, the United States Labor Department announced that the Consumer Price Index rose 0.3% in April, lower than analysts’ expectation of 0.4%. Year over year, the inflation stood at 3.4%, which aligned with expectations. Investors hope the signs of easing inflation could prompt the United States Federal Reserve to slash interest rates sooner than expected. Amid improving investors’ sentiments, here are two top Canadian stocks that you should look to add to your portfolio
WELL Health Technologies
WELL Health Technologies (TSX:WELL) is one of the top growth stocks to have in your portfolio due to its expanding addressable market and improving profitability. The growing popularity of virtual healthcare services and the digitization of clinical procedures have created a multi-year growth potential for the company. Meanwhile, the company reported an excellent first-quarter performance last week, with its revenue growing by 37%. Organic growth contributed 13%, while the remaining from the acquisitions over the previous four quarters.
With WELL Health focusing on improving its profitability and capital efficiency, its net income stood at $19.6 million compared to a loss of $10.6 million in the previous year’s quarter. However, removing special items, its adjusted net income grew 43.3% year over year to $20.2 million. Also, its free cash flows to shareholders per share increased by 11%.
Further, the company’s investment in developing AI (artificial intelligence)-powered products and continued acquisitions could expand its market share, thus driving its financials in the coming quarters. For 2024, the company’s management expects its revenue to be between $960 million and $980 million, with the midpoint representing a 25% year-over-year increase. Its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) could be in the range of $125 million to $130 million, an improvement from $113.4 million in the previous year.
Despite its healthy outlook, WELL Health trades at 12.7 times analysts’ projected earnings for the next four quarters, making it an attractive buy.
Dollarama
Second on my list is Dollarama (TSX:DOL), a defensive stock with a tilt toward growth. The Canadian discount retailer has an extensive presence nationwide, with 1,551 stores. It has adopted a superior direct-sourcing model, increasing its bargaining power and lowering intermediatory expenses. So, the company can provide a wide range of consumer products at attractive prices. Its attractive pricing has prompted healthy footfalls even during challenging macro environments.
Since fiscal 2011, Dolalrama has grown its sales at an annualized rate of 11.5%. Solid same-store sales and the expansion of its store network from 652 to 1,551 have driven its top line. Along with top-line growth, its adjusted EBITDA has grown at an annualized rate of 17.3%, while its adjusted EBITDA margin has expanded from 16.5% to 31.7%. Supported by these solid financials, the company has returned around 1,315% at an annualized rate of 24.7% over the last 12 years.
Meanwhile, Dollarama has planned to increase its store count to 2,000 by fiscal 2031, while its subsidiary, Dollarcity, expects to add 328 stores over the next five years. Given its capital-efficient, growth-oriented business model, quick sales ramp-up, and low average payback period for new stores, these expansions could continue to drive its financials. The company has also raised its dividends 13 times since 2011. Considering all these factors, I believe Dollarama would be an excellent buy.
