Easing trade tensions has improved investors’ sentiments, thus supporting equity market growth. The S&P/TSX Composite Index has increased by around 11.6% compared to last month’s lows. However, concerns over global economic growth amid protectionist policies ?astill persist. So, investors should balance their portfolios with quality growth, defensive, and dividend stocks. Against this backdrop, let’s look at my three top picks.
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Celestica
Considering its solid financial growth and healthy growth prospects, I have chosen Celestica (TSX: CLS) as my first pick. The company has outperformed its first-quarter guidance, with its topline growing by 20% year-over-year. Solid growth of 28% in its CCS (Connectivity & Cloud Solutions) segment boosted its sales, while the revenue from its ATS (Advanced Technology Solutions) segment rose 5%. A 99% increase in its Hardware Platform Solutions boosted its CCS sales. Its adjusted operating margin has improved from 5.9% to 7.1%. It has also repurchased 0.9 million shares for $75 million. Amid the revenue growth, expanding operating margin, and share repurchases, its adjusted EPS grew by 44.6% to $1.20.
Moreover, investments in artificial intelligence-related infrastructure are rising amid the increased adoption of AI, thus raising the demand for Celestica’s storage, computing, and networking solutions. The company continues to develop innovative products to meet the needs of its customers, therefore supporting its financial growth. After posting its first-quarter performance, Celestica has raised its 2025 guidance. The new revenue guidance represents a 12.4% increase from the previous year, while its adjusted EPS (earnings per share) could grow by 28.9%. So, its growth prospects look healthy.
Fortis
Fortis (TSX: FTS) owns and operates 10 regulated utility assets, serving 3.5 million customers across the United States, Canada, and the Caribbean. Around 93% of its assets are engaged in the low-risk transmission and distribution business, shielding its financials from economic cycles. Besides, the company’s growing rate base has supported its financial growth, thus driving its stock price. Over the last 20 years, the company has delivered an average total shareholder return of 10.3%, beating the broader equity markets. FTS stock has also raised its dividends for 51 years and currently offers a forward dividend yield of 3.6%.
Moreover, Fortis is continuing with its expansion initiatives and plans to invest around $26 billion over the next five years. These investments could grow its rate base at an annualized rate of 6.5% through 2029 to $53 billion. Besides, rising customer rates, improving operating efficiencies, and falling interest rates could support its financial growth in the coming years. Amid these growth initiatives, Fortis’s management expects to raise its dividends at an annualized rate of 4—6% through 2029. Considering all these factors, I am bullish on Fortis.
Waste Connections
Waste Connections (TSX: WCN) is an excellent defensive bet due to the essential nature of its business and consistent financials. The waste management company collects, transports, and disposes of non-hazardous solid waste. It operates in secondary and exclusive markets in the United States and Canada, thus facing less competition and enjoying higher margins. It has expanded its business through organic and inorganic growth. Since 2020, the company has completed over 100 acquisitions, outlaying $6.5 billion of cash. Amid the solid financial growth, the company has returned 525% in the last 10 years at an annualized rate of 20.1%.
Meanwhile, WCN continues to expand its footprint through organic and inorganic growth. It is building 12 renewable natural gas and resource recovery facilities, which could add around $200 million to its annualized EBITDA from next year. The company had completed several acquisitions this year as of April 23, which could add around $125 million to its annualized revenue. Considering all these factors, I believe the uptrend in the company’s financials will continue, thus supporting its stock price growth.
