It can be incredibly difficult to find Canadian stocks that look like a solid investment. That’s why tuning into what analysts are saying about stocks is one of the best ways to start your research. Analysts day in and day out look for opportunities, providing “strong buy” to “strong sell” recommendations, and everything in between.
Yet today, we’re focusing on the former. Let’s look at two Canadian stocks analysts continue to recommend as a “strong buy,” and why.
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FC
Analysts and dividend-income investors view Firm Capital Mortgage Investment (TSX: FC) as a compelling “buy.” That’s largely because it ticks several boxes that income-seeking portfolios favour. First and foremost, it offers a monthly dividend schedule that aligns nicely with cash-flow goals. The Canadian stock pays approximately $0.94 per share and with a yield near 8%.
This high-yield profile is bolstered by a business model built around short-term real-estate mortgage lending – in particular, niche markets underserved by large banks. The portfolio is heavily weighted toward first mortgages, floating interest-rate loans and relatively conservative loan-to-value ratios. All prime signs for investors to dig into.
Another plus analysts point to is the valuation metrics. FC trades at a modest 12 times future earnings and 1.1 times book value. All considered, FC stands out as a strong buy candidate in the monthly-income space. It combines a high yield, monthly payout rhythm, and a business strategy with structural advantages and a reasonable valuation. For investors who prioritize income, it presents an attractive option.
PIF
Another solid option analysts believe could be a strong buy is Polaris Renewable Energy (TSX: PIF). This is a strong buy for a handful of reasons that centre around its renewable-energy focus, potential upside, and current valuation. The Canadian stock operates geothermal, hydroelectric, and solar assets in Latin America and the Caribbean. This gives it exposure to fast-growing renewable markets rather than being tied to slower-moving Canadian energy infrastructure.
Part of the rationale is that PIF sits at a relative valuation discount with regard to its book value. Furthermore, some suggest its asset base and project pipeline are not fully priced in. As of writing, it trades at just 17 times forward earnings and 0.85 times book value. This gives room for asset re-rating if the Canadian stock meets its targets, especially since renewable-energy markets attract premium valuations when growth and execution align.
All in all, the strong buy case for PIF hinges on a clean growth story in renewable energy, significant upside potential based on the current valuation, and an expanding project pipeline that could start delivering more predictable cash flows. For an investor comfortable with project-risk and a renewable-energy focus, analysts believe PIF offers a compelling value proposition right now.
Bottom line
Analysts are literally paid to dig deep into Canadian stocks like these. If you’re on the hunt for a lesser-known winner, finding analyst recommendations is certainly a great place to start. And when it comes to finding a dividend stock and growth stock on the TSX today, these two Canadian stocks stand out for almost any investor.
