It has been a bull market for Canadian stocks in 2024. The TSX Index has significantly outperformed its average. Many of Canada’s best stocks have delivered even better returns.
While that may be discouraging for an investor with cash on the sidelines, there are always opportunities to be found. Here are three great stocks shrewd investors can swipe up right now.
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A specialty insurance company on the cusp of more growth
Trisura Group (TSX: TSU) is a little-known specialty insurance provider in the U.S. and Canada. This Canadian stock provides niche insurance lines for businesses (like surety) and insurance fronting for re-insurers. With a market cap of $1.89 billion, it is one of the smallest listed insurers in Canada.
However, that does not mean it hasn’t been successful. Its stock is up 316% over the past five years. Its stock growth largely happened in 2020 and 2021, and the stock has flatlined since. However, there are promising signs for further long-term returns.
The company earns attractive high-teens returns on equity. Likewise, it has a low-cost operating model that helps it earn above-average profit margins.
The company has been tweaking its underwriting practices. This might have some near-term earning impacts, but it will result in a more stable, profitable business in the long term.
In the meantime, this Canadian stock is attractive. Larger specialized insurers in the U.S. trade at significantly higher valuations. If this Canadian stock can return to the steady growth posture of the past, it could continue to deliver strong results for shareholders.
A Canadian blue chip stock ready to shine in 2025
Canadian Pacific Kansas City (TSX: CP) stock is down over 5% in the past six months. It presents an attractive entry for long-term shareholders. The railroads have suffered over the past few years.
The North American economy has weakened, and freight movement (especially intermodal) has drastically slowed. This is compounded by numerous strikes and weather events that hampered rail volumes.
Fortunately, Canadian Pacific has done a great job navigating these issues. Last quarter, it was one of the only railways that actually saw year-over-year growth. It also happened to raise its volume guidance in the quarter.
Since its acquisition of CPKC, the company has been making good progress on synergies. Likewise, it is finding plenty of growth opportunities in the combined entity. The company is generating strong free cash flows and quickly paying down debt from the acquisition. As a result, it should be positioned to reward shareholders in 2025 and beyond.
This Canadian stock is not the cheapest railroad. However, if you can add to it on dips (like the present), it should pay off.
A misunderstood Canadian waste stock
If you want a Canadian stock that has both a value, growth, and dividend dimension, SECURE Energy Services (TSX: SES) is interesting. The stock is up 75% in 2024. However, there are good reasons to believe there is more to come.
Given its name, Secure sounds like a classic ultra-cyclical energy services company. However, it has recently transformed to be a leading waste management and energy infrastructure business in Western Canada.
While waste management is a dirty business, it is a necessary, high-recurring business with very attractive margins. In many instances, it operates a monopoly. That provides persistent pricing power and strong demand.
After divesting several waste sites, it has a strong balance sheet and has been aggressively buying back stock. Year to date, it has bought back 19% of its stock!
It trades at a substantial discount to other larger waste businesses (that often collect a premium). Shareholders could see more attractive upside as it bridges that valuation gap. It pays a 3% yield while you wait.
