The S&P/TSX Composite Index is up 19.5% this year amid interest rate cuts, strong earnings, and a post-election rally. However, rising geopolitical tensions, the impact of President-elect Donald Trump’s universal tariffs, and higher-than-expected October inflation are causes of concern. Given the uncertain outlook, investors should look for a balanced portfolio. Against this backdrop, here are three stocks that are ideal buys now.
Celestica
Celestica (TSX:CLS) is an excellent growth stock to have in your portfolio due to its exposure to the high-growth AI (artificial intelligence) sector and solid financials. The acceleration in AI usage has expanded the demand for AI-ready data centres, thus expanding the company’s addressable market. Meanwhile, the company continues to develop and introduce innovative products, including switches and storage controllers, that would meet the high-bandwidth needs of hyperscale data centres.
Celestica is also expanding its footprint through acquisitions and strategic partnerships. In May, it completed the acquisition of NCS Global Services, an IT infrastructure and asset management company in the United States. It has also signed a strategic partnership with Groq, an AI company that has developed a proprietary silicon platform that specializes in accelerated inferencing. Given the favourable environment and its growth initiatives, I expect the company’s financials to continue growing at a healthier rate, thus boosting its stock price.
Dollarama
Dollarama (TSX:DOL) would be an excellent defensive stock to have in your portfolio due to the essential nature of its business. The company’s unique direct sourcing and efficient logistics allow it to offer various consumer goods at cheaper prices. So, the company enjoys healthy same-store sales even during the challenging macro environment. Meanwhile, the company continues expanding its store network by opening 60-70 stores annually and hopes to reach 2,000 stores by the end of fiscal 2031. Given its capital-efficient business model and quick sales ramp-up, these expansions could boost its bottom line.
Dollarama owns a 60.1% stake in Dollarcity, which operates 570 retail stores across Latin America. Dollarama also has an option to increase its stake by 9.89% within three years. Meanwhile, Dollarcity has strong expansion plans and is projecting to increase its store count to 1,050 by the end of 2031. Considering these growth initiatives, I expect Dollarama’s financials to continue growing at a healthier rate, thus supporting its stock price growth.
Enbridge
Third on my list is a high-yield dividend stock, Enbridge (TSX:ENB), which offers a juicy dividend yield of 6.19%. The energy infrastructure company transports oil and natural gas across North America. It also has a strong presence in the utility and renewable energy space. Meanwhile, the company earns around 98% of its cash flows from long-term contracts, thus delivering stable and predictable cash flows, irrespective of the broader market conditions. Amid these healthy cash flows, the company has paid dividends for 69 years. It has also raised dividends for 29 consecutive years at an annualized rate of 10%.
Moreover, Enbridge is continuing with its $27 billion secured capital program, with already $5 billion invested in the first three quarters of this year. These investments could expand its midstream, renewable, and utility assets, thus boosting its financials. The company’s financials could also benefit from the acquisition of the three natural gas utility assets in the United States. Amid these growth initiatives, Enbridge’s management projects its adjusted earnings before interest, tax, depreciation, and amortization to grow at 7-9% through 2026, while its discounted cash flows/share could grow at 3%. Given its healthy growth prospects and solid cash flows, Enbridge is well-positioned to continue its dividend growth, thus making it an ideal dividend stock to have in your portfolio.
