TSX stocks have been performing relatively well with the TSX Index up 9.7% in 2024. However, I’m still convinced you need to be a stockpicker in Canada.
There are some excellent companies in the Index, but there are many more poor-to-just-okay businesses. If you want to be a stockpicker, here are three high-quality businesses to buy right now.
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A top-quality TSX energy stock
Tourmaline Oil (TSX: TOU) is the largest natural gas producer in Canada and a major oil producer as well. Natural gas has been in the doldrums. The energy commodity is trading just above 52-week and 5-year lows.
Certainly, that doesn’t bode well for Tourmaline. However, it may bode well for shareholders long term. Anytime natural gas hits the bottom, it tends to bounce back up. Often with commodity stocks, you want to buy them at the bottom. Then you need to be patient waiting for them to charge up as pricing starts to improve.
Tourmaline has access to top-priced markets, so pricing is not quite as crucial as for other gas producers. New LNG facilities will help to improve pricing in Canada.
Tourmaline is a low-cost producer with a leading balance sheet. This TSX stock is distributing almost 100% of its spare cash to shareholders in base dividend increases and special dividends.
Any incremental increase in gas prices will translate to excess cash going to shareholders. Things aren’t likely to get much worse from here. However, if natural gas prices turn upward, this TSX stock could really charge upward.
A top TSX real estate services stock
Another TSX stock to check out right now is Colliers International Group (TSX: CIGI). This has been a long-term compounder delivering high teens returns for more than 20 years.
However, this TSX stock has stalled in the past few years. Elevated interest rates have all but stalled the real estate transaction business. While that is now a smaller part of its overall real estate services business, it can be extremely profitable when average real estate activity normalizes.
Colliers now has a wider array of recurring services/revenues across its business. It has a substantial consulting/engineering business and growing asset management division. Its overall business is less cyclical than ever before.
The company has a CEO who is also a major shareholder. If this TSX stock can maintain its high-teens growth rate over the long term, its price-to-earnings (P/E) ratio of 20 looks reasonable.
A diversified business at a reasonable price
A final TSX stock to buy today is Calian Group (TSX: CGY). It may not be the most exciting business in Canada, but its fundamentals are solid. Calian has a diversified business across healthcare, specialized technologies, IT/cyber, and training.
This is useful because when one business slows, another tends to pick up, and vice versa. It is a major vendor to the Canadian military, government agencies, and institutions. These are very reliable contracts. With its diverse mix of businesses, it can win multi-service contracts that other vendors can’t.
While this TSX stock is experiencing solid organic growth in 2024, new acquisitions have started to move the needle. It expects to grow earnings before interest, tax, depreciation, and amortization (EBITDA) by 30% in 2024. The acquisitions should expand its geographic presence and help increase margins.
Calian is one of the cheapest growth stocks you will find on the TSX. It trades with a dividend yield of 2% and a P/E ratio of 11 (despite the company growing by three times that). Given the nice valuation, the company has used its solid balance sheet to buy back stock.
