The Toronto Stock Exchange rewarded investors with a +17.99% gain last year, substantially improving from the +8.12% in 2023. Five rate cuts by the Bank of Canada to reduce inflation were tailwinds for stocks. For 2025, CC&L Financial Group forecasts continued earnings growth in more sectors because of a stable environment. However, a tariff war with the United States could heighten volatility.
Two Canadian stocks that outperformed in 2024 and led their respective sectors deserve serious consideration. Alamos Gold (TSX:AGI) and Healwell AI (TSX:AIDX) should be on your watchlist in 2025. The mining stock delivered a nearly 50% return, while the healthcare stock gained +181.33% in one year.
Strong free cash flow generation
The materials sector (+13.47% year to date), where mining stocks belong, is off to a good start in 2025. Alamos Gold, in particular, has raced out of the gate and gained +20.02% from year-end. This $13.44 billion company is a diversified North American gold producer. A recent acquisition will unlock tremendous value.
Alamos Gold has three producing mines (two in Canada and one in Mexico) and four development projects (two in Canada, one in the U.S., and one in Turkey). Management said the growing intermediate gold producer boasts high-quality, long-life operations in low-risk jurisdictions. The strengths are expanding margins and profitability and strong ongoing free cash flow (FCF) generation.
In the first three quarters of 2023, operating revenues and net earnings increased 26% and 21% year over year to US$971 million and US$197 million. Cash flow from operations climbed 35% to US$469 million from a year ago. FCF, which funds high-return growth, reached US$88 million.
On July 12, 2024, Alamos acquired Argonaut Gold, including the Magino mine adjacent to its Island Gold mine. Its president and chief executive officer (CEO), John A. McCluskey, said, “We have further enhanced our unique positioning as a Canadian-focused, intermediate gold producer, with growing production and declining costs.
“The integration of Magino and Island Gold is expected to unlock significant synergies through the use of shared infrastructure. Together, they will create one of the largest and lowest cost gold mines in Canada with significant longer-term expansion potential supported by their long mine lives and ongoing exploration success,” McCluskey added.
At $31.83 per share, the trailing one-year price return is +92.32%. The potential overall return should be higher to include the modest 0.45% dividend yield. Alamos carries a “buy” to “strong buy” rating from market analysts.
High flyer
Healwell AI flew high in 2024 but currently trades at only $1.67. Still, the trailing one-year price return is +138.57%. Market analysts’ 12-month average price target is $4.14, a potential +147.9% upside. The business outlook is positive, given the record revenue in the third quarter (Q3) of 2024, increased customer activity, and merger & acquisition pipeline.
The $348.12 million healthcare technology company offers artificial intelligence (AI) tools and software to healthcare providers. Its AI-accelerated preventive care can detect, discover, and diagnose rare, complex, and chronic diseases. In the three months ending September 30, 2024, revenue grew 738% to $13.7 million versus Q3 2023.
Its CEO, Dr. Alexander Dobranowski, noted the growing demand for Healwell’s AI and healthcare solutions. Moreover, the robust acquisition pipeline ensures substantial growth ahead.
Upward momentum
Alamos Gold and Healwell AI are screaming buys for their visible growth potential. Both stocks could repeat their performance in 2024 or do better.
