Top Canadian Stocks to Buy in July 2024

These three Canadian stocks are set up for success if the past is any indication, and future favourites are correct.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published June 24, 2024 3:45 pm EDT

Investors hoping for growth might be looking towards the future. But today, we’re going to consider the past — in this case, the more immediate past of earnings results. There are some Canadian stocks coming out with earnings in July that have histories of surges in share price after those earnings.

Today, we’re going to look at why this might happen again for Shopify (TSX:SHOP), Constellation Software (TSX:CSU), and Canadian Pacific Kansas City (TSX:CP).

Canada national flag waving in wind on clear day — Source: Getty Images

Shopify stock

First, Shopify stock. Shopify has a history of strong earnings performance and subsequent stock price jumps. Investors are particularly keen on their earnings due to the company’s rapid growth and market position in e-commerce.

With earnings on July 26, investors should certainly watch what’s coming next, especially given recent momentum. During the fourth quarter of 2023, Shopify’s revenue increased by 24% to $2.1 billion, with free cash flow reaching $905 million compared to negative free cash flow the previous year. This strong performance led to a positive reaction in the stock market, with shares seeing a noticeable uptick post-announcement.

By the first quarter, revenue grew 23% year over year to $1.86 billion. The company made a non-GAAP (generally accepted accounting principles) profit, which was in line with analysts’ expectations. This stable performance did not lead to a significant immediate spike in the stock price but maintained investor confidence.

Still, analysts expect revenue growth in the low 20% range year over year, driven by strong performance in their core e-commerce platform and improved operational efficiency. Meanwhile, investors are looking for continued growth and profitability improvements, with a focus on how Shopify leverages its recent logistics business sale to Flexport to enhance margins and operational focus.

Constellation Software

Then there’s CSU stock, with continued strong results. This software company has shown strong performance and significant share price jumps following earnings reports, making it a stock to watch for potential growth. Earnings are now due out on July 27.

As for earnings, the company posted robust earnings with a significant increase in revenue from new acquisitions in the fourth quarter of 2023. This strong financial performance led to a marked increase in the stock price. By the first quarter, Constellation Software reported higher-than-expected earnings, driven by strong performance across its various software segments. The stock saw a considerable rise post-earnings.

For this coming quarter then, analysts forecast continued revenue growth, with a focus on the company’s acquisition strategy driving earnings. Analysts expect the company to maintain its historical performance of surpassing earnings expectations. Meanwhile, investors expect robust earnings performance driven by the successful integration of new acquisitions and organic growth within existing business units. Investors are also watching for any updates on future acquisition plans.

CP stock

Finally, CP stock is the oldest of the batch but is due for even more growth. Known for consistent performance and positive earnings surprises, CP is a key player in the transportation sector, which can lead to notable stock price movements post-earnings. Earnings are due out on July 18 for the railway company.

As to earnings, CP stock reported a strong fourth quarter with a notable increase in revenue and operating income. This positive earnings report resulted in a substantial jump in the stock price. The company reported first-quarter earnings that slightly exceeded market expectations, with significant growth in freight revenues. The stock saw a moderate increase following the announcement.

And the future? Analysts project strong earnings growth driven by higher freight volumes and improved operational efficiencies. Revenue is expected to rise due to increased demand for transportation services. Investors anticipate positive earnings results and are keen on the company’s ability to integrate its recent acquisitions effectively, expecting further improvements in profit margins and revenue growth. Altogether, investors should continue to consider watching these stocks for future growth opportunities in July 2024.