3 Top-Performing Canadian Stocks That Should Just Keep Winning

Given their healthy growth prospects and solid underlying businesses, the uptrend in these three top-performing Canadian stocks could continue.

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Yesterday, the Bureau of Labour Statistics announced that the United States Consumer Price Index rose 3.3% in May, lower than analysts’ projection of 3.4%. Despite easing inflation, the Federal Reserve remained hawkish and expects only one rate cut this year. Meanwhile, the volatility in the Canadian equity market continued on Thursday, with the S&P/TSX Composite Index falling 1.2%.

The index has fallen 2.5% this month and is trading just 3.5% higher for this year. Despite the volatile environment, the following three Canadian stocks have outperformed and could continue their uptrend.

Celestica

Celestica (TSX:CLS) is one of the top performers in the Canadian equity markets, with returns of over 100%. The electronics manufacturing services company offers design, manufacturing, and supply chain solutions for companies covering various sectors. The company has delivered impressive returns this year due to its exposure to high-growth markets and solid financials.

In the first quarter of this year, the company reported a 20% increase in its top line while its adjusted EPS (earnings per share) expanded by 83%. It also produced an adjusted free cash flow of $65.2 million compared to $9.2 million in the previous year’s quarter.

With the growing adoption of artificial intelligence in various sectors, the demand for high-speed compute switches has increased, thus expanding the addressable market for Celestica. Meanwhile, the company is also focusing on launching innovative product offerings that could meet the growing needs of its customers.

So, I expect the uptrend to continue. Despite solid momentum in its stock price, the company’s valuation looks cheaper, with its NTM (next 12-month) price-to-sales and price-to-earnings multiples standing at 0.7 and 17, respectively. Considering its growth prospects and cheaper valuation, I am bullish on Celestica despite the broader volatility.

Dollarama

Despite the challenging macro environment, Dollarama (TSX:DOL) continues to drive its same-store sales. In the recently reported first quarter, which ended on April 28, the company’s same-store sales grew by 5.6% on the back of a 17.1% increase in the previous year’s quarter. The 8.7% increase in transactions offset a 2.8% decrease in average transaction value, driving its same-store sales. The company has also raised its store count by 62 units over the last four quarters to 1,569. Amid the toppling growth, gross margin expansion, and increased contribution from Dollarcity, Dollarama’s net income increased by 20% to $215.8 million.

Further, Dollarcity has updated its long-term target after assessing its expansion potential in Latin America. Dollarcity’s management now expects its store count to reach 1,050 by 2031, compared to its earlier guidance of 850 by 2028. Further, Dollarama has also increased its stake in Dollarcity from 50.1% to 60.1%. The increased stake and Dollarcity’s growth initiatives could increase Dollarcity’s contribution to Dollarama.

Further, Dollarama continues to expand its footprint by adding 50-60 stores annually until 2031, bringing its store count to 2,000. Given its capital-efficient, growth-oriented business model and quick sales ramp-up, these expansions could support its financial and stock price growth in the coming quarters.

Suncor Energy

Amid the concerns over rising geopolitical tensions and the extension of voluntary production cuts by OPEC (Organization of the Petroleum Exporting Countries) and its allies, oil prices have strengthened this year, benefiting energy companies such as Suncor Energy (TSX:SU). The company is up over 22% this year. Despite the increase in its stock price, its valuation looks attractive, with its NTM price-to-sales and NTM price-to-earnings multiples at 1.3 and 8.9, respectively.

Further, analysts predict oil prices will remain higher this year amid continued production cuts and the expectation of increased fuel demand in summer. Further, Suncor Energy plans to invest around $6.3-$6.5 billion this year, expanding its asset base. The company’s management projects its upstream production and refinery utilization to rise this year. Thus, higher commodity prices and increased production could drive the company’s financials in the coming quarters. The oil and natural gas producer also offers a quarterly dividend of $0.545/share, with its forward yield currently at 4.30%. Considering all these factors, I believe Suncor Energy would be an excellent buy right now.

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 Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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