Those looking to capitalize on what’s been an increidble run in the Canadian stock market have a few excellent options to choose from. Among the blue-chip names I think can really outperform from here, I’ve got a couple names on my watch list I’m paying really close attention to right now.
Let’s dive into why history says these two companies are worth considering right now.
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Suncor
Suncor (TSX: SU) is a textbook case of what happens when sentiment and fundamentals diverge.
Over multiple cycles, Suncor has rewarded investors who bought when energy was hated. Indeed, those who simply collected dividends while the market eventually repriced its cash flows have come out ahead.
Today, the company is coming off record upstream production and refining throughput, having hit ambitious operational and cost targets a year ahead of schedule, yet still trades at a low-teens forward price-to-earnings multiple that bakes in very little growth.
With WTI breakevens down around US$10 per barrel in recent years, thanks to an incredible efficiency push from Suncor’s management team, this is now a stock I think is even more attractive at $80 per barrel than it was when Suncor was hovering around the $40 level for much of the past five years.
With a dividend yield around the low-3% range, backed by rising normalized free cash flow, investors are effectively being paid to wait for the market to recognize Suncor as the lean, cash-generative operator it has already become.
Toronto-Dominion Bank
Toronto-Dominion Bank (TSX: TD) is the kind of boring blue chip that quietly compounds wealth in the background, and history suggests that buying Canada’s best-capitalized banks during periods of macro anxiety has tended to work out very well for long-term investors.
TD combines a dominant domestic franchise with a sizable U.S. footprint, which has helped diversify earnings across interest-rate cycles and credit environments over the years. Today, that earnings base supports a generous dividend that “pays you to wait,” along with the potential for renewed buybacks as regulatory and macro clouds eventually clear.
From a fundamentals perspective, TD continues to screen as one of the more compelling value ideas among the Big Five, trading at a discounted earnings multiple versus its own historical averages and offering a dividend yield that sits well above the broader TSX.
The bank’s scale and diversified revenue streams provide a buffer against near-term volatility, while long-term tailwinds like population growth, credit expansion, and a more benign rate environment can drive earnings and book value higher over time. For investors willing to think in 5- to 10-year increments, TD’s combination of discounted valuation, durable income, and embedded growth looks like a setup history has rewarded before.
