Blank Make America Great Again Hat
As someone who lives and breathes the Canadian way of life, I often become called on by InvestorPlace to write about Canadian stocks to buy.
Some obvious names that trade on the New York Stock Exchange or the Nasdaq come to listen. Many of them depend on America for much of their livelihood. It's why the latest U.Southward. election cycle has been mesmerizing television set for Canadian concern executives.
In November, CEOs beyond Canada and those operating from within the U.S. were definitely sweating the details. After all, when the U.S. sneezes, Canada catches a common cold.
As professor Richard Leblanc notes, "At that place really isn't an industry that'south immune from what happens south of the edge . What goes on, goes right to the elevation very quickly." Leblanc teaches governance, law and ethics at York University in Toronto.
Well, Joe Biden won and Donald Trump lost. Canada will at present get ready to come across how the relationship shifts — and it e'er does after a change in presidents.
So, for this article, I'thousand recommending seven Canadian stocks that generate a pregnant corporeality of their acquirement in the United States. As the headline reads, each one could be considered the feather in America's hat.
- Lululemon (NASDAQ: LULU )
- Shopify (NYSE: SHOP )
- BRP (NASDAQ: DOOO )
- Enbridge (NYSE: ENB )
- Toront0-Dominion (NYSE: TD )
- Thomson Reuters (NYSE: TRI )
- FirstService (NASDAQ: FSV )
Canadian Stocks to Buy: Lululemon (LULU)
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I remember when I first recommended this apparel brand back in August of 2016. I called LULU stock a top 50 S&P 500 investment over the next decade. The only trouble was it wasn't part of the index — and still isn't.
At the fourth dimension, Lululemon's sales in the U.Due south. accounted for over 60% of its fiscal 2015 acquirement of $$2.1 billion (Page 61). In the visitor's fiscal year 2019, U.South. sales accounted for over 71% of its $4 billion in annual revenue.
Despite an increase in the percentage of sales generated in the U.S. over these four fiscal years, the company also did an excellent job of growing sales in its dwelling market of Canada and overseas.
Every bit big a deal as this pick of the Canadian stocks was four years ago, it's an even bigger bargain today.
On Dec. 10, it reported Q3 2020 sales that grew 22% year-over-twelvemonth (YOY), despite a serious downturn in walk-in traffic due to Covid-nineteen. CNBC reports that Neil Saunders, the Retail Managing Managing director at GlobalData, said, "While a V-shaped recovery may non be materializing for near of wearing apparel retail, Lululemon has bounced back from the weak kickoff to its year with a stunning set of third-quarter numbers […] Our information also show that Lululemon has picked up plenty of new shoppers, peculiarly in womenswear."
And then, when information technology comes to retail, Lululemon is one of the all-time stocks to own — and it just happens to be run out of Vancouver.
Shopify (SHOP)
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Given the returns of tech stocks in 2020, Shopify'southward performance — a twelvemonth-to-date (YTD) total return of 195% through Dec. 18 — seems nigh pedestrian.
The reality is, though, that Shop stock is having a skilful yr and (barring some major change in consumer shopping habits) the company'south e-commerce platform volition remain in demand for companies of all sizes.
Every bit InvestorPlace'due south Faisal Humayun stated recently, Shopify is crushing it .
"From a financial perspective, the visitor reported cash and equivalents of $6.1 billion [as of the terminate of September]," Humayun wrote on December. 14. He added, "In improver, with improving operating leverage, I expect operating cash flows increase in the coming years. This will permit the company to continue aggressive investments in growth and research and development."
The terminal time I covered SHOP on a single-stock ground was in April, when it traded around $525. At the time, I wondered if the stock would be heading to $650 or dorsum to $350 , where information technology traded during the March correction.
I concluded that if y'all were holding Shopify stock for the long haul — say 2-3 years — buying in the $500s wasn't a bad call. Now, it has doubled from April prices to over $1,170 per share.
Heading into 2021, I don't know if SHOP volition double once again. However, solid returns definitely appear to exist in the cards for this ane of the Canadian stocks, given its business organization model's undeniable force.
BRP (DOOO)
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BRP stands for Bombardier Recreational Products, but yous probably improve know its brands — Ski-Doo, Lynx, Sea-Doo, Tin-Am, Alumacraft boats and more. While the company's heritage is in snowmobiles, it has as well grown to become a big seller of all-terrain vehicles (ATVs) and side-by-side vehicles (SSVs).
In the third quarter ended October. 31, BRP had sales of over one.67 billion CAD (over $1.31 billion), 1.ix% higher than in the same quarter a year earlier. However, on the bottom line, information technology had operating profits of 284.3 million CAD (almost $223 million), nearly 37% higher YOY.
Every bit a result of a more than profitable sales mix in fiscal 2021, the company is expected to grow its normalized earnings per share (EPS) past about 37% this twelvemonth, despite an overall 1.4% decline in sales. Consumers are paying top dollar for its year-round products (ATVs, SSVs) and that'south showing up on the income statement.
In November 2018, I recommended investors purchase Po laris (NYSE: PII ), BRP'south biggest rival . Right now, information technology'due south upward marginally over the two-year period. At the same time, DOOO stock is up 177% over the same catamenia.
As it continues to gain global market share, I expect BRP to keep delivering strong double-digit returns for shareholders in 2021, earning its identify on this listing of the all-time Canadian stocks.
Enbridge (ENB)
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In 2019, Enbridge generated 30.ane billion CAD ($23.6 billion) in the The states, bookkeeping for roughly lx% of its overall revenues (Page 120). In the past two financial years, ENB's sales in Canada have grown by 10.four%. Due south of the border, nonetheless, they grew by a more than robust 14.4% over the same period. While that might non seem like a large difference, when you lot're talking about over 50 billion CAD in almanac revenue, it'south noticeable.
At present, about of the Canadian stocks on this list are growth-oriented stocks. Just Enbridge — whose energy infrastructure helps go on Northward America running — is a combination of value, growth and income.
On Dec. 8, the company declared a iii% increase in its quarterly dividend to 83.five cents CAD. The annualized dividend rate of 3.34 CAD yields a very healthy seven.8%. Plus, with three.95 billion CAD ($3.1 billion) in free cash period over the past 12 months and growing at a good for you clip, ENB stock has plenty of cash to make the annual payments.
Its total return YTD is -16%. As long as the oil and gas industry continues to sputter, Enbridge might experience the same result in 2021. However, with the visitor expected to begin construction on the Line 3 pipeline projection in Minnesota in the yr ahead, Enbridge's growth plans are starting to await upward.
And so, get paid by waiting on Enbridge to inevitably grow its concern south of the border.
Toronto-Dominion Depository financial institution (TD)
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It's not been a good year for virtually Canadian banks, although Toronto-Dominion's most recent quarterly results advise the pandemic's wrath may exist coming to an terminate. Recently, TD stock has come on in recent months, gaining over eighteen% in the by three months alone.
The depository financial institution reported its Q4 results on Dec. 3. On an adapted basis, TD earned 2.97 billion CAD (over $ii.32 billion) in cyberspace income, slightly higher than the ii.95 billion CAD ($2.31 billion) it made a year earlier. For the unabridged yr, information technology earned 9.97 billion CAD (roughly $7.viii billion), a little more 20% lower than the year earlier.
What's more, Toronto-Dominion'south U.Due south. retail cyberbanking business concern accounted for roughly 30% of its overall net income during the fourth quarter, raking in 871 million CAD ($658 million). Unfortunately, it was 27% lower than a year earlier. However, its Canadian retail banking was 3% higher YOY.
The about of import figure in the banking company's Q4 written report, though, was the steep drop in its provision for credit losses, which fell to 971 million CAD ($760 million) from 2.19 billion CAD ($1.72 billion) at the end of the tertiary quarter ending on July 31 (Page vii).
Too, on a positive notation, analysts expected TD to earn $i.27 during the quarter. It beat that estimate by 33 cents.
Once the U.S. economy returns to normal, Toronto-Dominion's U.S. retail business ought to make a bigger contribution to the bank's bottom line. And, let'southward not forget that the banking company also owns xiii.5% of Charles Schwab (NYSE: SCHW ).
In the concurrently, relish its 4.iii% dividend yield. Out of all of the Canadian stocks on the market, TD is definitely a solid pick.
Thomson Reuters (TRI)
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Next on my listing of some of the best Canadian stocks is TRI stock. In a challenging operating environs, Thomson Reuters reported excellent Q3 results on Nov. 3.
On the top line, sales grew past 2% during the quarter to $1.44 billion — and three% if yous exclude currency. On the bottom line, information technology earned 39 cents a share, 44% higher than a year earlier and 48% college if you exclude currency.
In fiscal 2019, Thomson Reuters generated 79% of its $5.9 billion in revenue in the United States. So, fifty-fifty though TRI is controlled by Canada'south richest family — the Thomsons, who own 66% of the company'due south stock — much of the company's wealth has been earned in the U.Southward.
Recently, Thomson Reuters as well completed a large-scale migration of its business information services to AWS, Amazon'due south (NASDAQ: AMZN ) deject-calculating service. The company's digital transformation will enable it to become a more agile concern in the future. As role of the migration, it moved thousands of servers to AWS.
While I don't think yous're going to striking a homerun owning TRI stock the aforementioned fashion you volition with Shopify, yous can't go incorrect with this name if preservation of capital is of import to you.
FirstService (FSV)
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Last on my list of Canadian stocks is FirstService, a leader in outsourced property services in North America. It'south definitely the smallest of the seven stocks listed in this commodity. But what it lacks in company size, it makes up for in outsized shareholder returns. So far in 2020, information technology's having a neat year with a total render of over 41% YTD.
FSV is divided into two operating segments : FirstService Residential, which manages residential communities, and FirstService Brands, a provider of "essential property services" like painting, property impairment restoration, flooring, closets and dwelling house inspections.
In the abaft 12 months ended Sep. 30, FSV had $ii.67 billion in sales, 90% of which was generated in the United States. The residual was made in its home base of Canada. Employing approximately 24,000 people, it had trailing 12-months adjusted EBITDA of $268 million, roughly 10% of its top-line sales.
In 1995, the company had $37 one thousand thousand in revenue. Some 24 years later in 2019, acquirement was $2.41 billion. That makes for a chemical compound annual growth rate of nineteen% (Page five).
Yous can't get incorrect with businesses that make or salvage customers time and money. FirstService does both. It's an excellent long-term buy.
On the appointment of publication, Will Ashworth did not take (either straight or indirectly) any positions in the securities mentioned in this article.
Volition Ashworth has written virtually investments full-time since 2008. Publications where he's appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.
Blank Make America Great Again Hat
Source: https://investorplace.com/2020/12/7-canadian-stocks-that-are-the-feather-in-americas-hat/