The Canadian equity markets have continued their post-election uptrend, with the S&P/TSX Composite Index rising 0.85% yesterday. Investors look buoyant on Donald Trump’s pro-growth policies, driving the equity markets. Moreover, this year has been excellent for investors, with the index rising 18.5%. Solid earnings growth, easing inflation, and the central bank’s rate cuts have boosted stock prices.
Meanwhile, the following four Canadian stocks have outperformed the broader equity markets this year, and given their growth prospects, I expect the uptrend to continue.
Celestica
After delivering impressive returns of 154% last year, Celestica (TSX:CLS) has continued its uptrend this year, with its stock price rising 204.8% year to date. Its solid performances, the raising of 2024 guidance, and healthy long-term growth prospects have driven its stock price higher. The company’s management has stated that it has received strong demand signals from its large customers, which could support its financial growth next year.
Meanwhile, the growth in the usage of artificial intelligence has expanded the demand for high-speed computing switches, expanding Celestica’s addressable market. The company continues to innovate to meet its customers’ needs. Besides, it strengthened its position in manufacturing AI (artificial intelligence)/ML (machine learning) servers and full-rack solutions through a strategic partnership with Groq. Considering these growth prospects, I expect the uptrend in Celestica to continue.
Dollarama
Dollarama (TSX:DOL) is another top performer this year, with returns of 56.8%. The discount retailer’s value proposition continued to attract customers in a challenging macro environment, thus driving its financials and stock price. Meanwhile, the company plans to expand its store network to 2,000 by the end of fiscal 2031 from 1,583 stores. Given its cost-effective growth-oriented business model and lean operations, the expansion could continue to drive its financials.
Moreover, Dollarama owns a 60.1% stake in Dollarcity, which operates 570 retail stores in Latin America. It also has an option to increase its stake by 9.89% by the end of 2027. Dollarcity has planned to add 480 stores over the next six years, raising its store count to 1,050 by 2031. A higher stake and expanding store network could boost Dollarcity’s contribution to Dollarama. Considering its growth prospects and solid underlying business, I am bullish on Dollarama.
WELL Health Technologies
WELL Health Technologies (TSX:WELL) reported an impressive third-quarter performance yesterday, with its topline growing by 27% to $251.7 million. Organic growth contributed 23%, while acquisitions over the previous four quarters contributed 4%. Besides, its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) grew 16% to $32.7 million. After posting its third-quarter performance, the company’s management has raised its revenue guidance.
Amid its solid third-quarter performance, the company’s stock price rose 9% yesterday and is trading 28.1% higher this year, outperforming the broader equity market. Despite the considerable increase in its stock price, the company’s valuation looks attractive, with its NTM (next 12 months) price-to-earnings multiple at 17. Also, its growth prospects look healthy amid the growing popularity of virtual healthcare services, digitization of patient records, and increased usage of software services in the healthcare sector. So, I expect the uptrend in WELL Health’s stock price to continue.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) has witnessed substantial buying over the last three months, with its stock price rising by 23.6% from its August lows. The Bank of Canada’s interest rate cuts and improving financials have increased the company’s stock price. Despite the surge, the company trades 11 times its projected earnings for the next four quarters, which looks attractive. It also offers a juicy forward dividend yield of 5.65%.
Meanwhile, BNS’s operating metrics are improving, with its net interest margin and common equity tier-one ratio rising in the July-ending quarter. It also witnessed deposit growth during the quarter. Further, the company has made a strategic investment in KeyCorp, which could boost its near-term profitability and diversify its United States business. Considering its growth prospects, improving financials, and attractive valuation, I believe BNS would be an excellent buy now.
