Yesterday, the Labor Department of the United States announced that first-time jobless claims came at a seasonally adjusted 233,000 for the week ending August 3. The jobless claims were lower than analysts’ estimate of 240,000, easing recession fears and driving equity markets. The S&P/TSX Composite Index rose 1.6% yesterday and is up 6% this year.
Amid improving investors’ sentiments, you can buy the following three stocks that have outperformed the broader equity markets this year and could continue their uptrends.
Waste Connections
Supported by its solid performances in the first two quarters of this year, Waste Connections (TSX:WCN) is trading over 25% higher this year. Its top line grew by 10.2% in the first six months amid organic growth and accretive acquisitions. Price increases and volume growth of 100 basis points boosted its organic growth. Its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) grew by 15.6% to $1.38 billion, while its EBITDA margin expanded by 150 basis points to 32%. Further, its adjusted EPS (earnings per share) grew 19.4% to $2.28.
After posting a solid second-quarter performance, WCN’s management stated that the momentum would also continue in the second half. So, it has raised its 2024 guidance, with the new revenue and adjusted EBITDA guidance representing 10.3% and 14.9% year-over-year growth, respectively. The company is constructing several renewable natural gas and resource recovery facilities, supporting its long-term growth potential. Moreover, WCN has also raised its dividends at 14% CAGR (compound annual growth rate) since 2010, making it an excellent buy now.
Dollarama
Another stock that has outperformed the broader equity markets is Dollarama (TSX:DOL), which has returned 32.5% year to date. In the recently reported first quarter of fiscal 2025, the company’s revenue grew by 8.6% amid same-store sales growth of 5.6% and net addition of 62 stores over the last four quarters. Further, its EBITDA rose 14% while its EBITDA margin expanded by 140 basis points to 29.7%.
Moreover, given its growth initiatives, I expect the upward momentum in the stock to continue. The company has planned to add around 430 stores over the next six years to increase its store count to 2,000 by fiscal 2031. Further, it has raised its stake in Dollarcity, which operates convenience stores in Latin America, from 50.1% to 60.1%. Also, Dollarcity has planned to increase its store count from 547 to 1,050 by the end of fiscal 2031. Store expansion and higher stakes could increase Dollarcity’s contribution towards Dollarama. Considering all these factors, I believe Dolalrama would be a perfect addition to your portfolio despite the substantial increase in its stock price.
WELL Health Technologies
WELL Health Technologies (TSX:WELL), a tech-enabled healthcare company, has returned 18.4% this year, outperforming the broader equity markets. Its impressive first-quarter performance and raising of 2024 guidance have increased investors’ confidence, driving its stock price. Despite the rise, the company still trades at an attractive NTM (next-12-month) price-to-earnings multiple of 18.2.
Further, the growing popularity of virtual services, increased usage of software services in the healthcare segment, and digitization of patient records have created a multi-year growth potential for the company. Meanwhile, the company is developing innovative artificial intelligence-powered products and making strategic partnerships and acquisitions, which could expand its market share and boost its share price.
