This year has been excellent for Canadian investors, as easing inflation, interest rate cuts, and solid quarterly performances drove equity markets higher. The S&P/TSX Composite Index is up 21.7% year to date. However, concerns over ongoing geopolitical tensions, a global economic slowdown, and uncertainty over tariffs’ impact still persist. Given the uncertain outlook, the following three Canadian stocks could be an excellent addition to your portfolios.
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Waste Connections
Waste Connections (TSX:WCN) collects, transfers, and disposes of non-hazardous solid wastes across the United States and Canada. It is also involved in resource recovery through recycling and renewable fuel generation. Supported by its solid quarterly performances and continued acquisitions, the company has returned 33.7% this year, outperforming the broader equity markets.
In the recently reported third-quarter earnings, WCN reported revenue and adjusted EPS (earnings-per-share) growth of 13.3% and 15.4%, respectively. Its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) grew 17.3% while expanding its adjusted EBITDA margin by 120 basis points to 33.7%. A 6.8% increase in core pricing, solid waste volume growth, and contribution from acquisitions over the last four quarters boosted its financials.
Meanwhile, WCN continues to focus on organic growth and acquisitions to drive growth. It is investing in developing renewable natural gas (RNG) and resource recovery facilities, with some of these facilities projected to become operational in 2026. It has also adopted technological advancements to improve operating efficiency and employee safety. WCN recently raised its quarterly dividend by 10.5% to $0.315/share, with its forward yield at 0.66%.
goeasy
goeasy (TSX:GSY) is an alternative financial services company offering subprime customers leasing and lending services. Supported by solid financials over the last 20 years, the company has delivered around 3,200% returns at an annualized growth rate of 19.1%. Despite its strong growth, the company has acquired a small percentage of market share in the $218 billion Canadian subprime market, thus offering a substantial scope for expansion.
Meanwhile, goeasy strengthened its funding capacity by raising $700 million by issuing senior unsecured notes. Its comprehensive product range, solid distribution network, and geographical expansion could continue to expand its loan portfolio. The company has adopted next-generation credit models, enhanced the underwriting and income verification process, and tightened its credit tolerance, which could lower delinquencies and improve its profitability. Also, the company has rewarded its shareholders with consistent dividend growth at an annualized rate of around 30% for the last 10 years. It currently offers a forward yield of 2.86%. Considering all these factors, I believe goeasy would be an excellent buy.
Dollarama
Dollarama (TSX:DOL), a discount retailer, would be my final pick. The company has adopted a superior direct sourcing method, eliminating intermediatory expenses and strengthening its bargaining power. Also, its efficient logistics network allows the company to offer a wide range of products at attractive prices, thus enjoying healthy same-store sales even during challenging market conditions.
Given the positive customer response to its value offerings, Dollarama has raised its store network expansion target. The company expects to have 2,220 stores by the end of 2034 compared to its earlier target of 2,000 stores by the end of 2031. So, to support its growth prospects and improve operating efficiency, the company has planned to build a logistics hub in Western Canada, with an investment of $450 million — excluding $46.7 million in land acquisition expenses. Given its capital-efficient business model, quick sales ramp-up, and lower pay-back period, these expansions could boost its top and bottom lines.
Moreover, Dollarama owns a 60.1% stake in Dollarcity, which operates 588 stores in Latin America. Dollarcity plans to expand its store network to 1,050 by the end of 2031. Further, Dollarama has an option to increase its stake to around 70% by the end of 2027. Considering its growth prospects, I expect Dollarama to deliver oversized returns next year.
