The best way for new investors to gain exposure to the equity markets is to buy and hold low-cost index funds that track popular indices such as the S&P 500. However, those with a higher risk exposure can consider investing a small sum in quality growth stocks at regular intervals to grow their wealth over time.
Here are two of the best Canadian stocks you can consider buying with $1,000 right now.
Enerflex stock
Valued at $950 million by market cap, Enerflex (TSX:EFX) provides energy infrastructure and energy transition solutions. It deploys natural gas, low-carbon, and treated water solutions that include modularized products and integrated custom solutions.
Enerflex reported revenue of $683 million in the first quarter (Q1) of 2024, above the year-ago sales of $610 million. Its higher sales can be attributed to the energy infrastructure product line as it expanded the scope and extended the term of an existing Build-Own-Operate-Maintain (BOOM) contract. This contract supports the expansion of Enerflex’s water solutions business and is expected to double project revenue while improving total returns over a four-year term.
However, Enerflex reported a gross profit of $119 million, indicating a margin of 19%, compared to revenue of $159 million and a margin of 28% in the year-ago period. Its falling gross profits meant Enerflex’s adjusted EBITDA (earnings from interest, tax, depreciation, and amortization) narrowed from $90 million to $69 million in the last 12 months.
Enerflex ended Q1 with $1.6 billion of contracted revenue, primarily in the energy infrastructure business, providing shareholders with top-line visibility. This will be supplemented by recurring after-market services sales and a $1.3 billion backlog in the engineering systems segment.
Enerflex aims to enhance the profitability of its core operations and reduce balance sheet debt, increasing its financial flexibility in the process.
Analysts expect Enerflex to end 2025 with an adjusted earnings per share of $0.6 in 2025, compared to a loss of $0.9 per share in 2023. Bay Street remains bullish and expects the TSX stock to gain over 35% in the next 12 months.
Secure Energy Services stock
Valued at $3.8 billion by market cap, Secure Energy Services (TSX:SES) is engaged in the waste management and energy infrastructure businesses in Canada and the United States. In Q1 of 2024, Secure Energy closed the sale of 29 facilities to Waste Connections for $1.15 billion, repaying the entire amount drawn on the $800 million senior secured revolving credit facility.
The asset sale meant that Secure Energy Services saw a 13% drop in sales in the March quarter, while adjusted EBITDA declined by 13% to $132 million or $0.13 per share.
In Q1, Secure Energy Services reported a funds flow from operations of $108 million or $0.38 per share, while free cash flow stood at $93 million or $0.33 per share. It suggests the company spent $15 million in capital expenditures, which should drive future cash flows higher.
Secure Energy pays shareholders a quarterly dividend of $0.10 per share, which indicates its dividend payout is quite sustainable at 33%. Analysts remain bullish on Secure Energy Services stock and expect it to gain around 18% in the next 12 months.
