After the TSX Index rose to new all-time highs last week, it is becoming harder to find Canadian stocks at attractive valuations. During the Trump mini-crash, you could pick up almost any stock and watch it rise from that bottom.
However, investing is more challenging today. The stock market appears to be in a no-man’s zone as the global economy weakens and politics creates uncertainty for businesses.
As a result, investors need to be shrewd. One of the best ways to offset some of the volatility is to own a diversified portfolio of quality Canadian stocks. Here are four stocks I’d buy with $10,000 right now.
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A quality Canadian dividend stock
It never hurts to earn some dividend income when the stock market is volatile. One stock that looks interesting after a recent pullback is AltaGas (TSX: ALA). I like this stock because it is like a hybrid between Fortis and Pembina Pipeline.
Over 55% of its income comes from a solid regulated natural gas utility that is strategically positioned in the U.S. northeast. The remainder of its income comes from a growing midstream business in Western Canada.
Nearly 85% of its income is contracted, so it offers a safe stream of cash flows. Both its operations have mid-to-high single-digit growth potential. This Canadian stock yields 3.3% today. However, an investor’s yield on cost should rise as it hits its long-term 5–7% annual dividend growth target.
A blue-chip stock to hold for decades
Canadian Pacific Kansas City (TSX: CP) has a 144-year history operating a cross-Canada railway. Its rail network has stood the test of time and it remains economically essential to date.
Today, CP operates the only single network that spans across Canada, the United States, and Mexico. That recently amalgamated network provides CP elasticity to quickly adapt to any trade or economic uncertainty.
This company is extremely well managed and operated. CP delivered market-leading growth last quarter. It just raised its dividend 20% and announced a 4% share buyback. The transcontinental railway is targeting low-to-mid teens growth for the next few years, so now is not a bad time to buy this blue-chip Canadian stock.
A small-cap Canadian stock with big potential
VitalHub (TSX: VHI) has a market cap of $566 million. However, it is possible that this company could be many multiples larger in the years ahead.
VitalHub provides software specialized for the healthcare industry. It sells its software in Canada, the U.K., Australia, and the Middle East. While this healthtech has been delivering strong organic growth, it has also used M&A (mergers and acquisitions) to expand its service catalog and geographic reach.
This Canadian small-cap stock has a cash-rich balance sheet to help fuel its growth journey. VHI stock has recently pulled back, which could make it a nice time to add it.
A property services business for steady growth
A larger-cap Canadian stock to look at buying is FirstService (TSX: FSV). With a market cap of $10 billion, FirstService is a substantial property manager and property services provider in North America.
The company earns attractive cash flows from its property management division. It has steadily deployed this cash into accretive opportunities in the property services category (disaster restoration, painting, cabinetry, fire protection, and commercial roofing).
Generally, this Canadian stock has grown by a low-teens rate. It still has a large market to acquire and grow into. FirstService is a well-run business worthy of a long-term hold. FSV stock is down 8% this year, so it could be a nice time to buy it.
