The Canadian stocks have remained resilient despite a challenging macro backdrop. Looking ahead, expectations of rate cuts, investors’ growing appetite for risk, and optimism over artificial intelligence (AI) technology will likely support the upward trend in stocks.
Against this backdrop, here are my top four Canadian stocks to buy right now. These fundamentally strong companies will likely deliver solid growth and generate above-average returns in the coming years.
goeasy
Shares of financial services company goeasy (TSX:GSY) could be a solid addition near the current price levels. The stock has consistently outperformed the broader equity markets over the past decade. It has gained nearly 65% in one year, and the momentum in its stock will likely be sustained. Despite this notable increase, the stock is trading at a price-to-earnings multiple of 10.2, which is compelling given goeasy’s high earnings per share (EPS) growth rate and decent dividend yield.
This subprime lender is poised to deliver stellar financials led by a large addressable market, increasing geographical footprint, wide product base, and diverse funding sources. In addition, its solid credit underwriting capabilities, steady credit performance, and operating efficiency will bolster its earnings, share price, and dividend payments.
Dollarama
Dollarama (TSX:DOL) is a no-brainer stock poised to deliver above-average capital gains and steady dividend income. Moreover, its low-risk business model will likely add stability to your portfolio. The discount retailer focuses on offering products at low and fixed price points, which attracts value-driven customers to its stores. Further, its extensive store base and wide product assortment support its growth.
Dollarama stock is up about 43% over the past year. Further, it has grown at a compound annual growth rate of about 21.6% in the past five years. Its value-pricing strategy, direct sourcing, and expansion of stores bode well for future growth. The company is well-positioned to deliver steady growth and will enhance shareholders’ value through higher dividend payments.
Celestica
Celestica (TSX:CLS) stock has rallied over 302% in one year. This has driven its valuation higher. However, investors should note that Celestica’s premium valuation is justified, considering its high growth rate. The company, which provides supply chain solutions, is benefitting from its exposure to high-growth sectors such as AI and electric vehicles (EVs). These mega trends provide a solid base for future growth.
The growing adoption and deployment of artificial intelligence computing will likely benefit Celestica. Moreover, the ongoing strength in the commercial aerospace submarkets will likely support its Aerospace and Defense revenues. While the short-term slowdown in the EV market is a drag, the long-term fundamentals remain strong as the shift towards EVs and smart energy will accelerate its growth rate.
Constellation Software
Canadian tech companies could be a valuable addition for investors to generate stellar capital gains. Within the tech sector, Constellation Software (TSX:CSU) stock stands out for its ability to consistently generate solid growth and beat the benchmark index with its returns. For instance, Constellation Software stock is up about 45% in one year. Moreover, CSU stock has grown at a CAGR of nearly 29% in the last five years, delivering a gain of about 255%.
Constellation Software’s broad portfolio of software businesses and large and growing customer base will likely drive its financials and share price in the upcoming years. Further, its custom solutions and strategic acquisitions position it well to capitalize on evolving tech trends and deliver solid financials.
