Top 3 Canadian Stocks to Watch This Year

Here are three top Canadian growth stocks that have outperformed in the past and could continue to provide outperformance moving forward.

| More on:
Canadian Red maple leaves seamless wallpaper pattern

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Canadian investors looking to gain outsized exposure to top Canadian growth stocks certainly have plenty to consider right now. Of course, those who already adjusted their portfolios toward a more risk-on stance have performed well. But at current valuations, there are certainly reasons for many investors to take a more cautious tone right now. I think more defensive positioning makes sense overall, but I’m also very aware that retaining some exposure to high-quality growth stocks makes sense at this point in the cycle as well.

For those looking to maintain such positioning toward higher-quality growth stocks, here are three top picks I think are worth owning for the remainder of the year and into 2025.

OpenText Corporation

Open Text (TSX:OTEX) provides information management software solutions and services to global companies, SMBs, consumers, and governments. The products offered by the company in its portfolio include content cloud, cybersecurity cloud, business network cloud, IT operations management cloud, application automation cloud, and analytics cloud.

Created with Highcharts 11.4.3Open Text PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

For fiscal 2024, OpenText reported revenue of $5.8 billion, a disappointing number compared to the previous one, though still pretty impressive. The company’s quarterly revenue grew by 8.6%. However, it can be remembered that OpenText does need to get through a fairly challenging macroeconomic environment, as it is more a hill in the road than a detour.

For shareholders, OpenText has a very attractive dividend yield of 3.6% with a somewhat moderate payout ratio of 58.5%. It is a great attraction to investors who are into dividends. Hence, with strong cash generation, OpenText is the one well-positioned to ensure that investors get rewarded even if it needs to reinvest for growth.

Lightspeed Commerce

Lightspeed Commerce (TSX:LSPD) is a Canada e-commerce software and point-of-sale provider. The company helps customers interact with their consumers, control the running of their operations, expand their business, and accept payment using the software. Notably, Lightspeed is a top operator in Canada but also has operations in the United States, Australia, the Netherlands, and other countries.

Created with Highcharts 11.4.3Lightspeed Commerce PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Lightspeed Commerce believes to achieve total revenue growth of at least 20% during fiscal 2025. The growth will mainly come from subscription revenue, such as sales outbound, price increases, and software selling. 

Transaction-based revenue is expected to deliver significant growth in the second quarter (Q2) fiscal 2025 because it will continue to expand the adoption of the company’s payments and capital offerings. Moreover, it does appear the company’s growth prospects are on the upswing, so profits may soon come for this $3.4 billion commerce software company.

Telus

Telus (TSX:T) provides various ranges of communication products and services, including data services, voice, IP, mobile, television, and several other related services. It is one of the big three wireless service providers in Canada, with more than nine million subscribers for mobile phone services across the country.

Created with Highcharts 11.4.3TELUS PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Telus paid out roughly 83% of its free cash flow over the past 12 months, having significantly improved over a comparable period in 2023. It has established its payout range to be between 60% and 75%. Although the current level is above this range, it can reach the target on a prospective basis, meaning the payout is safe and very well covered.

News recently indicates that Telus is brewing some attractive plans that may really be a big boon to its cash flow and help in improving the momentum of its dividend growth. Telus should provide consistent cash flow growth over time if the company’s management team can continue to increase efficiencies and spin off other segments as well. 

Should you invest $1,000 in Brookfield Asset Management right now?

Before you buy stock in Brookfield Asset Management, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Brookfield Asset Management wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Lightspeed Commerce and TELUS. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Investing

A shopper makes purchases from an online store.
Tech Stocks

Buy the Dip on the Return of Recession Stocks?

If a recession comes back, there are some stocks that could fair well afterwards. And this is one of the…

Read more »

RRSP Canadian Registered Retirement Savings Plan concept
Retirement

Here’s the Average Canadian TFSA and RRSP at Age 60

Many Canadian retirees have tens of thousands invested in ETFs like the iShares S&P/TSX 60 Index Fund (TSX:XIU).

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Here’s Exactly How a $20,000 TFSA Could Potentially Grow to $200,000

Index funds like the iShares S&P/TSX Capped Composite Index (TSX:XIC) are tax free in a TFSA.

Read more »

dividend growth for passive income
Investing

5 Canadian Growth Stocks to Buy and Hold for the Next 15 Years

These Canadian stocks have tremendous long-term growth potential, making them five of the best investments you can buy and hold…

Read more »

Man holds Canadian dollars in differing amounts
Stocks for Beginners

Cash Is King? Think Again During Today’s Market Dip

Sure, cash is great, but during a market dip investors may want to consider using some of the cash to…

Read more »

grow money, wealth build
Stocks for Beginners

How I’d Build a $15,000 Portfolio for Income and Growth With Canadian Value Stocks

Looking for some Canadian value stocks to buy without breaking the bank? Here's a trio to consider buying this month.

Read more »

Dividend Stocks

How I’d Invest $6,000 in Canadian Real Estate Stocks to Build Lasting Wealth

Canadian REITs on sale! See how grocery-anchored retail properties offering 9% yields could turn $6,000 into lasting wealth despite US…

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Investing

3 Canadian Value Stocks I’d Hold in My TFSA Through Market Volatility

Given their healthy growth prospects and discounted stock prices, these three value stocks would be ideal additions to your TFSA.

Read more »