Extending its recent uptrend, the S&P/TSX Composite Index climbed 1.7% on Monday and is now up 3.63% year to date. A recovery in metal prices, along with renewed investor interest in technology stocks, has improved market sentiment and helped lift Canadian equities.
Against this backdrop, let’s take a closer look at two Canadian stocks that have outperformed the broader market since the beginning of last year and could continue to deliver strong momentum as we advance.
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5N Plus
My first pick is 5N Plus (TSX:VNP), a producer and marketer of specialty semiconductors and performance materials serving several high-growth industries. After delivering an impressive 140% return last year, the Montreal-based company has continued its strong momentum, rising 55% year to date.
I expect this uptrend to persist, supported by accelerating semiconductor industry growth driven by expanding adoption of artificial intelligence (AI). In addition, rising demand across the terrestrial renewable energy and space-based solar power markets, combined with favourable pricing for bismuth-based products, should further support the company’s growth in the coming quarters.
5N Plus has also secured a US$18.1 million grant from the U.S. government to expand its recycling and refining capabilities for germanium derived from industrial residues and mining by-products. This investment will enable the company to scale operations and meet rapidly growing U.S. demand for germanium-based technologies.
Further strengthening its growth outlook, 5N Plus has announced plans to expand solar cell production at its subsidiary, AZUR SPACE Solar Power GmbH, which could increase capacity by approximately 25% this year. Combined with its high-quality product portfolio, global sourcing network, established manufacturing footprint, and resilient supply chain, these initiatives position 5N Plus well to capitalize on a rapidly expanding addressable market.
Kinross Gold
Another Canadian stock that continues to show strong momentum is Kinross Gold (TSX:K), which operates a diversified portfolio of mines across the United States, Canada, Brazil, Chile, and Mauritania. After delivering an exceptional 192% return last year, the Toronto-based gold producer is up roughly 19% year to date. Elevated gold prices, coupled with consistently strong quarterly results, have been key drivers of the company’s stock price.
In its recently reported third-quarter results, Kinross produced 503,862 gold-equivalent ounces, representing a 10.7% year-over-year decline due to planned lower output from its Tasiast and Fort Knox mines. Despite this production decline, profitability improved meaningfully. Adjusted earnings per share rose 83.3% year over year to US$0.44, supported by a sharp increase in average realized gold prices, which climbed 39.7% to US$3,460 per ounce.
Strong earnings translated into robust cash generation. Kinross reported attributable free cash flow of $686.7 million during the quarter. As part of its capital return strategy, the company targeted US$600 million in share repurchases last year and had already completed US$405 million of buybacks by the end of September. In addition, Kinross raised its quarterly dividend by 17% to $0.035 per share, implying a forward yield of approximately 0.3%.
The company’s balance sheet remains exceptionally strong, with cash and cash equivalents of $1.7 billion and total liquidity of $3.3 billion at the end of the third quarter.
Meanwhile, gold prices have rebounded in recent weeks following a pullback late last month, supported by ongoing geopolitical tensions and a weaker U.S. dollar. I expect gold prices to remain elevated over the near to medium term, which should continue to benefit Kinross. Combined with its focus on strengthening production capabilities and an attractive next-12-month price-to-earnings multiple of 11.4, Kinross Gold appears to be an excellent buy at current levels.
