Got $500? 3 Top TSX Stocks to Buy Right Now

If you are looking for investment ideas with decent return prospects, consider these three top TSX stocks for the long term.

| More on:

The TSX Composite Index is up about 50% in the last 12 months. Although some top-rallying TSX stocks appear to be running out of steam now, some names might continue to soar higher. If you are looking for Canadian stocks with decent return prospects, consider these three top TSX stocks for the long term.

BRP

The leading powersports vehicle maker BRP (TSX:DOO)(NASDAQ:DOOO) stock is up more than 36% so far in 2021. I’d recommended the stock in late December, given its earnings recovery and management’s upbeat outlook. The stock still seems to have some steam left.

BRP, which makes popular brands like See-doo, Ski-doo, and Cam-off, reported its quarterly earnings late last month. Driven by a consistent rise in demand, BRP’s revenues grew 12% year over year, while its net income expanded by a remarkable 123%. The management once again increased its guidance for fiscal 2022, which now indicates a normalized earnings growth of 41%.

Apart from solid quarterly earnings, another factor that could drive BRP stock this year is its foray into electric vehicles (EVs). This has largely been the theme in the markets for the last several months now. BRP announced to invest $300 million to make EVs in the next five years. It intends to introduce an electric version for each of its product lines by the end of 2026.

BRP’s dominant presence in the niche markets indeed gives it a competitive edge. Expected consumer spending increase in the post-pandemic world and now expansion in the EV space could continue to drive BRP stock higher.

Hydro One

Investors sometimes assume way higher risk just to achieve a few percentage points higher return. However, utility stocks offer a relatively better risk/reward proposition. Consider Hydro One (TSX:H). It has returned 70% in the last five years, beating the TSX Composite Index by a wide margin.

Hydro One is a utility that serves Canada’s most populous province Ontario. It generates a large chunk of its cash flows from regulated operations that provides stability and visibility. It pays stable dividends and yields 3.6% at the moment.

Hydro One has raised dividends every year since 2016. Though it has a relatively shorter payout history, it will likely pay consistently growing dividends for years, driven by its low-risk operations and earnings stability.

Air Canada

Air Canada (TSX:AC) stock has surged more than 22% this year. While it has soared mainly on the hopes of the long-awaited government bailout, we have not seen one so far.

Air Canada recently terminated its proposed Transat buyout after regulators rejected it. Investors cheered the decision, as the flag carrier can now use these cash savings to weather the crisis.

The rejection also gives up on the uncertainties of deploying cash in a relatively weaker unit when the air travel demand outlook is still doubtful. However, Air Canada might use these savings to grow organically once it starts operating with a reasonably higher capacity.

AC stock is still trading at about a 50% discount against its pre-pandemic levels. Its strong balance sheet and robust revenue recovery, probably in the second half of 2021, could continue to drive the stock higher.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned.

More on Dividend Stocks

Dividend Stocks

The 2 Best Canadian Blue-Chip Stocks to Buy Now

Blue-chip stocks can be some of the best stocks to have in any portfolio. But when they're trending upwards, investors…

Read more »

Canadian dollars in a magnifying glass
Dividend Stocks

Here Are My Top 3 Dividend Stocks to Buy Now

These top dividends stocks have consistently paid and increased their dividends. Further, this trend will continue.

Read more »

dividends can compound over time
Dividend Stocks

Want a 7% Yield? The 3 TSX Stocks to Buy Today

These TSX stocks are offering high yields of over 7%, making them attractive for investors seeking steady passive income.

Read more »

how to save money
Dividend Stocks

The Smartest Dividend Stocks to Buy With $200 Right Now

These smartest dividend stocks can consistently pay and increase their dividends in the coming years, irrespective of the macro uncertainty.

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

3 Utility Stocks That Are Smart Buys for Canadians in November

These utility stocks benefit from regulated businesses and generate predictable cash flows that support higher dividend payouts.

Read more »

Start line on the highway
Dividend Stocks

Invest $10,000 in This Dividend Stock for $600 in Passive Income

Do you want to generate passive income? Forget the rental unit! This option will save you the mortgage yet still…

Read more »

Senior uses a laptop computer
Dividend Stocks

1 Reliable Dividend Stock for the Ultimate Retirement Income Stream

TD Bank (TSX:TD) shares are way too cheap with way too swollen a yield for retirees to pass up right…

Read more »

A worker drinks out of a mug in an office.
Dividend Stocks

Is Brookfield Infrastructure Partners a Buy for its 4.75% Yield?

Brookfield Infrastructure Partners (BIP) has a 4.75% dividend yield. Is it worth it?

Read more »