With 2024 now in the books (for good or bad), investors are looking forward to what a New Year will bring. Of course, questions of whether the catalysts we saw drive stocks in 2024 will continue, or if the selling pressure we saw to end the year could continue into Q1.
With a Trump presidency in the U.S. and a high likelihood of a Conservative government in Canada ahead, certain stocks could see outsized gains over the course of the coming months, and for the rest of the year. Here are three of my top candidates I think can deliver the growth and overall returns most investors are after right now.
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Restaurant Brands
As one of the biggest fast-food restaurant operators in the world, Restaurant Brands (TSX:QSR) needs no further introduction. The company continues to benefit from strong performance from Tim Horton’s, with this banner continuing to provide most of the bread-and-butter growth for the fast food giant. Indeed, Tim Horton’s was the only quick service restaurant in the Canadian market with positive year-to-date traffic growth in Q3 2024, highlighting the quality of this company’s underlying portfolio and suggesting a return to much higher growth rates over time should materialize.
Overall, the fast food restaurant operator’s recent financial performance has reflected resilience in the face of a number of factors that continue to hamper companies operating in this sector. From the rise of GLP-1 drugs to increasing competition in many of the company’s core markets, Restaurant Brands has seen some modest growth materialize on a year-over-year basis, and I think the company’s growth rate could accelerate moving forward.
So long as Restaurant Brands continues to focus intently on cost discipline and improving its menu offerings and operational efficiency metrics, this is a company that could be poised for both significant dividend growth and capital appreciation over time. Trading at just 16 times earnings with a 3.6% dividend yield, QSR stock provides income, growth, and value in a market where those factors are hard to find in similar proportions.
Fortis
Fortis (TSX:FTS) is a Canadian utility giant with assets worth $70 billion and a portfolio of 3.5 million customers across Canada, the United States, and the Caribbean. Its primary businesses include power generation, natural gas distribution, and electricity transmission. Fortis has a capital-heavy business model that relies on expansion and growth initiatives funded by loans. Thus, recent interest rate cuts from the Bank of Canada should bolster the company’s balance sheet in a big way.
Over 2024, the utility company displayed a solid track record of successful acquisitions and investments. Fortis currently has a $26 billion capital program to increase its rate base from $39 billion in 2024 to $53 billion in 2029, which would increase its revenue and cash flow over that period. However, the company could not make many acquisitions over the past two years due to high interest rates.
With this headwind slowly dissipating, and continued emphasis on utilities companies as a way to play the AI revolution, I think this is a top Canadian stock investors will want to consider in 2025.
Shopify
As a leading global e-commerce company and one of the largest publicly traded companies in Canada, Shopify (TSX:SHOP) is well-positioned to benefit from a rally that really picked up near the end of last year. The omni-channel cloud-based platform has delivered exceptional bottom line and revenue growth all through 2024. As merchants and sellers frustrated with other e-commerce giants switch to opening their own shops, Shopify should be a key beneficiary of these trends.
In the third quarter, Shopify saw solid growth, with revenue rising 26% year-over-year to $2.2 billion year-on-year, surpassing the expectations of most analysts. Meanwhile, the company’s Gross Merchandise Volume (GMV) grew 24% year-on-year to $61 billion, while subscription revenue surged 26%. This is especially impressive given weak consumer demand and a volatile economic environment in 2024.
As the company continues to focus on lowering expenses and increasing operational efficiency, we can expect Shopify to continue its current growth trajectory. This company is a long-term growth stock I think is still worth adding at these higher levels right now.
