The Canadian equity markets have witnessed healthy buying over the last few days, with the S&P/TSX Composite Index rising 11% year-to-date. Amid improving investors’ sentiments, I am bullish on the following five stocks.
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Dollarama
Dollarama (TSX:DOL) is a discount retailer with an extensive presence across Canada. The company offers a wide range of consumer products at attractive prices through its superior direct sourcing and efficient logistics. So, it enjoys healthy same-store sales even during challenging environments.
Besides, the company is expanding its store network by opening 60-70 stores yearly and hopes to increase its store count to 2,000 by the end of fiscal 2031. Given its capital-efficient business model, quick sales ramp-up, and lower payback period, these expansions could boost its top and bottom lines. Further, it recently raised its stake in Dollarcity, which operates value stores in Latin America, from 50.1% to 60.1%. Dollarcity also has plans to add around 500 stores over the next six years, thus increasing its contribution towards Dollarama. Considering its healthy growth prospects, I expect Dollarama to outperform over the next three years.
Waste Connections
Waste Connections (TSX:WCN), a waste management company that operates in secondary exclusive markets in the United States and Canada, is my second pick. The company has utilized over 50% of its capital outlays since 2006 to make strategic acquisitions, thus boosting its financials. Continuing its acquisitions, the company has made several this year that could contribute $500 million to its annualized revenue. The acquisitions could also continue in the second half, with the company projecting the revenue contribution from acquisitions to increase to $700 million by the end of this year.
Moving toward its organic growth, WCN is constructing several renewable natural gas and resource recovery facilities, which could become operational in the coming years. Given the essential nature of its business, healthy growth prospects, and consistent dividend growth at a healthier rate, I am bullish on WCN.
Enbridge
Enbridge (TSX:ENB) would be my third pick due to its consistent dividend growth, high yield, and healthy growth prospects. The midstream energy company’s financials are less susceptible to commodity price fluctuations, with its long-term cost-of-service contracts providing stability. Supported by its healthy cash flows, the company has raised its dividends at an annualized rate of 10% for the previous 29 years. Besides, its forward dividend yield stands at a juicy 6.9%.
Further, the company has strengthened its position in the natural gas utility space by acquiring two assets in the United States. It is also working on acquiring a third asset, which management expects to close this quarter. Further, progression with its secured capital program could expand its midstream and renewable assets. Amid these growth prospects, I expect Enbridge to maintain its dividend growth.
WELL Health Technologies
As my fourth pick, I am picking a small-cap stock, WELL Health Technologies (TSX:WELL), which offers higher growth prospects. The growing adoption of virtual services, digitization of patient records, and increased usage of software services in the healthcare sector have expanded its addressable market. Meanwhile, the company is launching artificial intelligence-powered innovative products, which could help healthcare professionals deliver positive patient outcomes.
Further, the healthtech has also adopted a comprehensive cost-cutting program, which has improved its operating efficiency and delivered cost savings. Despite its growth initiatives, WELL stock trades at 1.1 times analysts’ sales projections for the next four quarters, making it an attractive buy.
goeasy
goeasy (TSX:GSY) is a subprime lender that has grown its top and bottom lines in double digits for the last 20 years. Despite this solid operating performance, the company has acquired around 2% of the $218 billion Canadian subprime market. So, its scope for expansion looks healthy. The falling interest rates and easing of inflation could boost economic activities, thus driving credit demand.
Meanwhile, the company’s expanded product range, solid distribution channels, geographical expansion, and growth in auto financing could allow it to benefit from the expanding addressable market. Also, its adoption of enhanced underwriting and income verification processes and next-generation credit models could lower risks. Considering all these factors, I believe goeasy would be an excellent buy.
