The Canadian stock market put up an exceptional year in 2024. The TSX Composite Index rose by 20%, which is nearly three times its average annual gain. It was undoubtably a good year.
However, a list of stocks massively outperformed the Index. And intriguingly, these stocks could continue to outperform in 2025 and hopefully even beyond. Here are three Canadian stocks that beat the market and could continue to do so for many years ahead.
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A Canadian software stock up 168%
Quality small cap stocks caught a bid in 2024 (finally). Many of these Canadian stocks were very long-suffering through 2023. However, things changed in 2024. VitalHub (TSX:VHI) was one of these stocks. It rose 168% in 2024. It beat the TSX by over eight times.
In mid-2023, VitalHub hit an inflection point where its healthcare-focused software businesses started to generate considerable free cash flow. Since then, it has made several smart acquisitions. Organic growth has grown at a nice pace. Recurring revenues and free cash flow have continued to trend higher.
The company financed equity at a valuation more than three times what it traded at a year ago. The great thing is that it can deploy that capital into acquisitions often at a fraction of where its shares trade.
That spells long-term accretion. Today, this Canadian stock isn’t cheap. However, it still has plenty of opportunities to grow and generate value for shareholders.
A waste infrastructure business up 97%
A mid-cap Canadian stock that massively outperformed in 2024 was Secure Waste Infrastructure (formerly known as Secure Energy Services) (TSX:SES). Its stock rose 97% in the year. That beat the market by five times.
2024 was a pivotal year for Secure. After making a huge waste infrastructure acquisition in 2021, it was forced by the Canadian competition bureau to divest $1.1 billion of assets. That allowed it to drastically reduce debt and buy back 19% of its shares in 2024.
The company is now a pure-play waste and energy infrastructure company. It has a strong margin profile that generates a lot of excess cash.
Despite its smart pivot in strategy, Secure trades at a material discount to other waste infrastructure peers. GFL Environmental just sold a similar business for 1.5 times where Secure stock trades at. With a dividend yield of 2.5%, an attractive valuation, and decent growth prospects, this stock has a bit of everything for investors today.
A Canadian retail stock rose 95%
A somewhat larger stock by market cap that outperformed was Aritzia (TSX:ATZ). This $6.1 billion company rose by 95% in 2024. The prior two years were challenging to be a shareholder. Aritzia had taken on too much inventory after the pandemic and sales took a slide as the economy weakened.
Fortunately, the company quickly rightsized its clothing lineup, reduced inventory, and cleaned up its operations. Today, it is making very good progress expanding into the United States.
Just a few weeks ago, it announced third-quarter results and the stock rose by nearly 20%. The company opened several flagship stores in the U.S. and continues to expect strong growth in upcoming quarters.
Certainly, its valuation has increased significantly. This stock is no longer cheap. However, it still has a substantial opportunity to win in the States and internationally. This Canadian stock could still have plenty more upside in the years ahead.
