Is it Time to Buy the TSX’s 3 Best-Performing Stocks?

While the long-term outlook for these three best-performing TSX stocks remains strong, investors may want to remain cautious in the short term due to the ongoing economic uncertainties.

Jitendra Parashar

Author Bio Jitendra Parashar is a financial journalist who has been writing for The Motley Fool Canada since June 2020. With more than 13 years of experience in financial journalism, equity research, and market analysis, he helps investors understand market developments and identify long-term investment opportunities. Before joining The Motley Fool Canada, Jitendra spent several years at Market Realist covering U.S. equities, major economic developments, and developments in the automotive and technology industries. He also worked in commodity and currency research at brokerage firms, gaining insight into how economic trends, central bank decisions, and geopolitical events influence financial markets. Jitendra writes for beginner investors, dividend seekers, and Canadians looking to build wealth over the long term. He also contributes to the daily TSX Today series, explaining key Canadian market developments and highlighting news investors should watch. Based in India, Jitendra follows Canadian and U.S. markets closely. Outside of work, he enjoys travelling in the Himalayas, street and nature photography, and exploring programming and artificial intelligence. Education MBA in Finance and International Business Bachelor's degree in Journalism Areas of Expertise Canadian and U.S. financial markets, long-term equity investing, dividend investing, macroeconomic and geopolitical trends, automotive stocks, emerging technologies, and artificial intelligence. Social Media Profiles LinkedIn Muck Rack Favorite Investment Quote “Simplicity is the master key to financial success.” — John C. Bogle

Published September 30, 2024 4:40 pm EDT

The TSX Composite Index recently hit an all-time high, surpassing the 24,000 mark, a level once thought unreachable. This market rally reflects optimism due mainly to declining interest rates in both Canada and the United States, which has encouraged investors to seek returns in stocks rather than safer but low-yielding bonds. The rally has been broad-based, but some TSX stocks have significantly outperformed their peers, making investors wonder whether now is the right time to jump in.

In this article, I’ll highlight TSX’s three best-performing stocks in 2024 and analyze whether they still offer attractive entry points.

CES Energy Solutions stock

With eye-popping 116.2% year-to-date gains, CES Energy Solutions (TSX: CEU) is currently the top-performing TSX stock of 2024. This Calgary-headquartered company primarily focuses on providing specialized chemical solutions to the oil and gas industry. It currently has a market cap of $1.7 billion as CEU stock trades at $7.46 per share.

Continued strength in CES Energy’s financial growth trends despite the ongoing macroeconomic uncertainty could be the primary reason behind its stock’s stellar performance in 2024. In the second quarter of this year, the company posted a 7.2% YoY (year-over-year) increase in its total revenue to $553.2 million as its business continued to benefit from high service intensity and attractive product mix. To add optimism, the company also managed to reduce its debt by $48.8 million last quarter to $306.3 million.

Although its capital expenditure-light, asset-light business model makes CES Energy’s long-term growth outlook strong, investors may want to wait for a dip before jumping in. With the stock already up over 116% this year, much of the optimism may be priced in, leaving limited room for further immediate gains.

IAMGOLD and New Gold stocks

The recent record-breaking rally in gold prices has also led to a solid increase in the shares of gold miners of late. This is one of the key reasons why IAMGOLD (TSX: IMG) and New Gold (TSX: NGD) are in the second and third spots among the best-performing TSX stocks this year. IAMGOLD has climbed 113.5% so far in 2024, while New Gold has gained nearly 108%. Both companies have capitalized on rising gold prices as demand for precious metals surged.

IAMGOLD currently has a market cap of $ 4.1 billion as its stock trades at $7.13 per share. This Toronto-based gold miner reported a 61.4% YoY increase in its second-quarter revenue to US$385.3 million, helping it post an adjusted quarterly net profit of US$84.8 million compared to an adjusted net loss of US$3.3 million in the same quarter of the previous year.

New Gold has a market cap of $3.2 billion as its stock trades at $3.99 per share. The Canadian metals miner recently entered a sustained free cash flow generation phase, with US$20 million in free cash flow for the second quarter of 2024. Strengthening gold and copper prices gave a boost to the company’s cash flow from operations, which stood at US$100 million last quarter.

As gold prices trade close to their record levels, both IAMGOLD and New Gold could continue to see further upside in the near term. However, the recent run-up in gold prices may already be reflected in their stock prices. That’s why investors may want to carefully look at their risk appetite before jumping in at these elevated levels, as any reversal in gold prices could result in sharp corrections in these mining stocks.