3 Top TFSA Stocks for July 2021

Tech stocks like Constellation Software Inc (TSX:CSU) are looking good in July 2021.

| More on:

Markets are heading pretty much sideways in the month of July. The TSX is up just 0.13% for the month, and the major U.S. indexes are hovering around 1%. Following the heavy volatility of 2020, things have gotten a lot sleepier.

That makes this month a great time to invest in stocks. We’re heading into earnings season, and a number of industries — airlines, hotels, and railroads — are just beginning to get over the damage they took from the pandemic. If their second-quarter earnings deliver, then they may see abrupt gains. In this article, I’ll explore three stocks that could rally when they release earnings this month — all of which would be perfect additions to a well-diversified TFSA.

Canadian National Railway

Canadian National Railway (TSX:CNR)(NYSE:CNI) is Canada’s largest railroad company. Shipping $250 billion worth of goods a year, it’s a true cornerstone of the North American economy.

CN Railway has a lot of potential in July. Last year, when the COVID-19 pandemic was raging, its stock rocketed to a high of $150. Despite the damage the company was taking from the pandemic, investors believed that it had strong potential in the ensuing recovery. This year, the stock actually declined in price. It now sits at $131.

Clearly, investors weren’t impressed with CN’s first-quarter results. But the second quarter could be a lot better. Every week, CN Railway puts out “weekly metrics” on its website, and they’re all up by double digits this quarter. This suggests that CNR will easily beat its second-quarter 2020 results and possibly beat analyst expectations as well.

Constellation Software

Constellation Software (TSX:CSU) is a Canadian tech company that has delivered absolutely phenomenal returns over the past 15 years. Since it went public in 2006, CSU stock has risen a whopping 10,000% in the markets. That’s thanks in no small part to a specific strategy its founder Mark Leonard has cultivated. Eschewing most venture capitalists’ focus on “hot new things,” Leonard seeks to acquire revenue-generating companies that share synergies with his existing businesses. It’s not the most common way for tech investors to approach things, but it has clearly worked. Over the years, CSU has grown its revenue and earnings exponentially, and it may continue to do so in the future. Its most recent quarter was a miss, but that just means you have the chance to scoop it up before next quarter’s earnings, which will likely be better.

Suncor Energy

Suncor Energy (TSX:SU)(NYSE:SU) is a Canadian energy stock that got severely beaten down in the COVID-19 pandemic. It ran four net losses in a row — including a $3.5 billion loss in just one quarter — and saw its stock price decline 62% from top to bottom. It was a tough year. But in the first quarter, Suncor began to come back to life. Thanks to surging oil prices, it was able to generate $2.1 billion in funds from operations, $746 million in operating income, and $821 million in net income. It was solid quarter. And with oil prices having been even higher in the second quarter than in the first, it’s quite likely to be bested in Q2.

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 Andrew Button owns shares of Canadian National Railway. The Motley Fool owns shares of and recommends Constellation Software. The Motley Fool recommends Canadian National Railway.

More on Dividend Stocks

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Where to Invest Your $7,000 TFSA Contribution

The TFSA is attractive for investors who want to generate tax-free passive income.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

TFSA Investors: 3 Dividend Stocks Worth Holding Forever

These TSX stocks have the potential to grow their dividends over the next decade, making them top investments for TFSA…

Read more »

Tractor spraying a field of wheat
Dividend Stocks

Is Nutrien Stock a Buy for its Dividend Yield?

Nutrien is down more than 50% form the 2022 highs. Is NTR stock now oversold?

Read more »

golden sunset in crude oil refinery with pipeline system
Dividend Stocks

Best Stock to Buy Right Now: Enbridge vs TC Energy?

Enbridge and TC Energy rebounded nicely over the past year. Are more gains on the way?

Read more »

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

2 Utility Stocks That Are Smart Buys for Canadians in November

Are you looking for some of the smart buys to consider in November? These utility stocks offer growth and a…

Read more »

View of high rise corporate buildings in the financial district of Toronto, Canada
Dividend Stocks

Is Power Corporation of Canada Stock a Buy for its 5% Dividend Yield?

Is Power Corporation of Canada (TSX:POW) stock's 5% dividend yield worth it? Discover why this resilient stock could be a…

Read more »

hand stacks coins
Dividend Stocks

Here Are My Top 3 Dividend Stocks to Buy Now

These three dividend stocks are ideal for strengthening your portfolio and earning a stable passive income.

Read more »

man touches brain to show a good idea
Dividend Stocks

3 No-Brainer REIT Stocks to Buy Right Now for Less Than $200

REITs have long been touted as some of the best dividend stocks out there if you want recurring, strong income.…

Read more »