One of the best ways to help you do research when you’re looking for Canadian stocks to buy is to see what analysts are saying about them.
In addition to reading investor presentations and listening to conference calls, analyst reports can help investors to better understand a company before deciding to invest.
In addition to the analysis they provide, though, analysts also typically give companies a target price and a buy, hold, or sell rating.
When you see that analysts have rated a stock as a “Strong Buy,” it can feel like a no-brainer investment. However, while analysts follow these companies closely and have a strong understanding of the business, their opinions should still be taken with a grain of salt.
For example, analysts often take a forward-looking view based on ideal scenarios, which can make them overly bullish. Furthermore, a stock rated “Strong Buy” doesn’t mean it will perform well immediately; it often just means that the analysts think it’s undervalued compared with its long-term prospects.
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How to use analyst buy ratings to your advantage
The best approach for investors is to use analyst opinions as a starting point. If multiple analysts are bullish on a company, it’s worth asking why. This helps you understand not just the business itself, but also how the stock is trading. Understanding the reasoning behind the rating is far more valuable than just blindly following it.
Furthermore, even if a highly rated stock is a solid company, it still might not be the right fit for your portfolio. For example, if you’re already heavily exposed to that sector or don’t fully understand how the company makes money, it’s probably best to pass.
With that in mind, here are five high-quality Canadian stocks that analysts currently rate as “Strong Buys” to add to your watchlist.
Five top Canadian stocks that analysts rate a buy
First off is one of the most undervalued stocks on the market today, Cargojet (TSX: CJT).
Cargojet is one of Canada’s top growth stocks thanks to its dominant position in the overnight air-freight market, operating the country’s primary network for time-sensitive cargo deliveries.
All 10 analysts that cover Cargojet rate the stock a buy, and its average analyst target price of $143.70 is a more than 72% premium to where Cargojet trades today, making it a stock you’ll certainly want to research.
Another stock with a unanimous buy rating from analysts is WELL Health Technologies (TSX: WELL). WELL operates in a defensive industry and has significant growth potential, yet it’s still undervalued.
So, it’s no surprise that the stock not only has a unanimous buy rating, but its average target price from the four analysts covering it is $7.75, a nearly 50% premium to where WELL stock is currently trading.
goeasy (TSX: GSY) is another high-quality Canadian stock with a lot of love from analysts that’s also trading off its highs.
The stock has consistently grown both its revenue and earnings for years and is showing no signs of slowing down.
Of the seven analysts covering goeasy, one recommends holding the stock, while the other six rate it as a buy. And its average analyst target price of $226.01 is a more than 31% premium to goeasy’s current price.
Another high-quality stock that’s proven for years that it can grow rapidly by acquisition and has quickly become an analyst favourite, is GFL Environmental (TSX: GFL), one of the best defensive growth stocks in Canada.
Even after its impressive 75% rally over the last three years, analysts think there is still more potential ahead. Of the 12 analysts covering GFL, two are recommending investors hold, while the other 10 are calling it a buy.
Finally, another consistent defensive growth stock that analysts are bullish on is Jamieson Wellness (TSX: JWEL).
Jamieson is a well-known health and wellness company with solid operations and impressive prospects for growth. So, it’s no surprise that it’s another stock with a unanimous buy rating from the six analysts covering it.
And its average analyst target price of $42.52 sits at a more than 22% premium to where it’s currently trading.
So, if you’re looking for high-quality Canadian stocks to buy now, these five analyst favourites are certainly some of the best to consider for your portfolio.
