Amid the post-election rally, the S&P/TSX Composite Index is up 18.8% year-to-date. President-elect Donald Trump’s pro-growth policies have increased investors’ optimism, boosting equity markets. Meanwhile, the following three stocks have outperformed the broader equity markets this year and could continue their uptrend, given their solid underlying businesses and healthy growth prospects.
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Celestica
Celestica (TSX:CLS) is one of the top performers this year, with the company trading 198.2% higher. The manufacturing and supply chain solutions firm’s exposure to the high-growth AI (artificial intelligence) sector, solid quarterly performances, and new product launches have boosted its stock price. In the recently reported third-quarter earnings, its revenue grew by 22% while its adjusted EPS (earnings per share) expanded by 60% to $1.05. The strong performance from its Connectivity & Cloud Solutions segment amid increased demand for Hardware Platform Solutions (HPS) networking switches drove its financials.
Driven by the AI (artificial intelligence) boom, the demand for computing and networking products is rising, thus expanding the addressable market for Celestica. Meanwhile, the company continues to launch innovative products (switches and storage controllers) to address the high bandwidth needs of AI/ML (machine learning) data centres. Besides, it recently strategically partnered with Groq, an AI company specializing in accelerated inferencing. Given the favourable environment and its growth initiatives, I expect an uptrend in Celestica’s financials to continue, thus delivering superior returns over the next five years.
Dollarama
Dollarama (TSX:DOL) is another stock that has outperformed the broader equity markets this year, with returns of 55.5%. Its healthy same-store sales and new store openings have boosted its top and bottom lines, thus driving its financials. Its unique direct sourcing method and efficient logistics allow it to offer various products at attractive prices. Amid the challenging macro environment, the company’s compelling value offerings led to healthy footfalls, driving its same-store sales.
Meanwhile, Dollarama continues to expand its store network and hopes to increase its store count to 2,000 by the end of fiscal 2031. Given its efficient capital business model, quick sales ramp-up, and a lower payback period, the retailer’s expansion could boost its top and bottom lines. Moreover, the company 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 9.9%. Further, Dollarcity plans to expand its store count to 1,050 by the end of 2031. Considering its growth prospects and solid underlying business, I expect the uptrend in Dollarama to continue.
Waste Connections
Waste Connections (TSX:WCN), which has returned 31.4% this year, would be my final pick. Supported by its solid organic growth and strategic acquisitions, the solid waste management company has posted impressive performances in the first three quarters of this year. Its revenue and adjusted EPS (earnings per share) grew by 11.2% and 17.9%, respectively. The company also raised its quarterly dividend by 10.5% to $0.315/share, with its forward yield at 0.67%.
Moreover, WCN is building renewable natural gas (RNG) and resource recovery facilities, with the management projecting to put 12 RNG projects into operation by the end of 2026. Further, it has invested in enhanced optical sorters and robotics, which can lower the workforce and deliver quality output. Along with organic growth, the company focuses on acquiring quality assets across the United States and Canada. So, I expect the uptrend in WCN’s financials to continue, thus supporting its stock price growth.
