The Canadian equity markets have witnessed a solid comeback over the last few days, with the S&P/TSX Composite Index rising 11.2% from this month’s lows. The cooling of trade tensions between the United States and China has improved investors’ sentiments, driving the equity markets. Amid improving investor sentiment, let’s assess three quality TSX stocks I am bullish on now.
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Shopify
Shopify (TSX:SHOP) offers internet infrastructure to enterprises worldwide to conduct and expand their businesses. The growing adoption of the omnichannel selling model has created a multi-year growth potential for the company. Amid the increasing demand, the company has increased its investments in R&D (research and development) to develop innovative product offerings to meet its customers’ growing needs. The company is focusing on expanding its core platform, international, B2B (business-to-business), enterprise, and offline businesses this year. Also, its growing penetration of payment solutions and geographical expansions could support its financial growth in the coming quarters.
Amid these growth prospects, Shopify’s management projects its first-quarter revenue to grow in the mid-20s, while gross profits could expand by the low-20s. The company’s management also expects its free cash flow margins to increase in the mid-teens. So, its growth prospects look healthy. Meanwhile, the omnichannel commerce company has witnessed healthy buying over the previous few days, with its stock price rising around 32% from its April lows. Despite the recent surge, the company trades at a 28% discount compared to its 52-week high. Given its healthy growth prospects and discounted stock price, investors with longer investment horizons could accumulate the stocks to earn superior returns.
Celestica
Celestica (TSX:CLS), which offers supply chain solutions to various industries, posted an impressive first-quarter performance yesterday, beating its guidance. Its topline grew 20% year over year to $2.65 billion amid healthy performance across both CCS (Connectivity & Cloud Solutions) and ATS (Advanced Technology Solutions) segments. The revenue from the CCS segment grew 28% to $1.84 billion, with the Hardware Platform Solutions segment generating around $1 billion in revenue. Meanwhile, revenue from the ATS segment increased by 5%. Amid topline growth, operating margin expansion from 5.9% to 7.1%, and share repurchases, its adjusted EPS (earnings per share) grew 44.6% to $1.20.
After reporting better-than-expected first-quarter earnings, Celestica’s management has raised its 2025 guidance. The management now expects its 2025 revenue to grow by 12.44%, while its adjusted EPS could increase by 28.9%. Its solid first-quarter performance boosted its stock price by 11.3% yesterday. However, it still trades at a 38% discount compared to its 52-week high, offering excellent buying opportunities.
Waste Connections
I have chosen a defensive stock, Waste Connections (TSX:WCN), as my final pick. The waste management company posted a healthy first-quarter performance on Wednesday, with its top line growing by 7.5% to $2.23 billion. Price-led organic growth and continued acquisitions helped overcome volume declines to boost sales. Its adjusted EPS grew 8.65% to $1.13. The company also generated $541.5 million of cash from operating activities and $332.1 million of adjusted free cash flow during the quarter.
Meanwhile, given its organic growth and continued acquisitions, I expect the uptrend in WCN’s financials to continue. The company has acquired several assets year to date that could add $125 million to its annualized revenue. The company’s continued improvement in employee retention and increased usage of technological advancements could support its margin expansions in the coming quarters. Considering its solid underlying business and healthy growth prospects, I expect WCN to be an excellent buy right now.
