Revitalizing Canadian Manufacturing: Stocks to Drive Economic Growth

Manufacturing stocks like Magna International (TSX:MG) could be on the verge of a boom

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Canadian manufacturing sector is on the edge of a tipping point. A confluence of different factors is about to unleash more capital investment in this segment of the Canadian economy. 

Fortunately, the market hasn’t realized this yet. Investors still have a chance to swoop in early and snap up manufacturing stocks that are trading at discounted valuations before a bull market erupts. Here’s why the manufacturing boom is upon us and the stocks you should watch closely as this trend unfolds. 

Manufacturing boom

North America’s manufacturing sector was hollowed out by globalization. Over the past three decades, all middle-class factory jobs moved to China and other low-cost parts of the world. However, this trend is over. Chinese wages have surged, which makes them less competitive, while Canadian and American companies are considering reshoring to avoid supply chain disruptions from sudden shocks to the global economy.

America has already unleashed substantial subsidies for green energy and semiconductor manufacturing. Now, Canadian authorities are attempting a similar strategy. Investors should see these strategic moves from the government as an early sign of a manufacturing boom. 

Here are the top manufacturing stocks to watch. 

Magna International

Automobiles are arguably the most exciting manufacturing sector in Canada right now. Canada doesn’t have a domestic car brand like Germany or Japan, but it doesn’t need one. Instead, Magna International (TSX:MG) is a contract manufacturer for the world’s leading original equipment manufacturers (OEMs). 

Created with Highcharts 11.4.3Magna International PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

The company produces vehicles and auto parts for over 58 major brands spread across the world. 

Now, the transition to electric vehicles is working in their favour. Electric vehicles need more proprietary parts that can only be supplied by Magna. Also, these parts and services have higher margins than traditional internal combustion engines. 

The Canadian government’s initiative to encourage electric cars is likely to benefit the stock. Meanwhile, it trades at a price-to-earnings ratio of 38.1 and offers a reliable 3.22% dividend yield. Keep an eye on this underrated manufacturing stock.  

Bombardier Recreational

The Bombardier brand probably evokes trains, but Bombardier Recreational (TSX:DOO) is a different company. This one is focused on fun leisure vehicles such as snowmobiles, all-terrain vehicles, side-by-sides, motorcycles, and personal watercraft. 

You’re probably familiar with their flagship brands, including Ski-Doo, Sea-Doo, Can-Am, and Lynx. 

Created with Highcharts 11.4.3Brp PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

The company saw a surge in sales during the pandemic, as people turned to some of the few recreational activities that were not restricted. Now, this growth spurt seems to be self-sustaining. 

BRP stock is up 28.6% over the past year, despite the worries about consumer spending and recession. However, earnings have grown faster. Earnings per share have compounded at a rate of 26% since the company was publicly listed in 2014. The stock still trades at a 9.7 multiple to earnings per share. 

Keep an eye on this underrated manufacturing stock, as Canadian vehicle makers boom. 

Should you invest $1,000 in Devon Energy Corporation right now?

Before you buy stock in Devon Energy Corporation, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Devon Energy Corporation wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $18,391.46!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 35 percentage points since 2013*.

See the Top Stocks * Returns as of 1/7/25

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 Vishesh Raisinghani has no position in any of the stocks mentioned. The Motley Fool recommends Brp and Magna International. The Motley Fool has a disclosure policy.

If You Thought Apple and Microsoft Were Big, You Need to Read This.

The steel industry produced the world's first $1 billion company in 1901, and it wasn't until 117 years later that technology giant Apple became the first-ever company to reach a $1 trillion valuation.

But what if I told you artificial intelligence (AI) is about to accelerate the pace of value creation? AI has the potential to produce several trillion-dollar companies in the future, and The Motley Fool is watching one very closely right now.

Don't fumble this potential wealth-building opportunity by navigating it alone. The Motley Fool has a proven track record of picking revolutionary growth stocks early, from Netflix to Amazon, so become a premium member today.

See the 'AI Supercycle' Stock

More on Investing

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

The Absolute Best Canadian Stocks to Buy and Hold Forever in a TFSA

All three of these Canadian stocks have several advantages, making them some of the absolute best to buy and hold…

Read more »

Canadian dollars in a magnifying glass
Dividend Stocks

Take Full Advantage of Your TFSA With These Top Stocks for 2025

These TSX stocks offer attractive dividend yields.

Read more »

dividend growth for passive income
Investing

3 Canadian Growth Stars Under $30

These under-$30 TSX stock have promising long-term growth potential and will help investors accumulate significant wealth over time.

Read more »

jar with coins and plant
Dividend Stocks

3 Premium TSX Dividend Stars Trading Under $50

Reinvest the dividends of these three high-yielding stocks for superior returns.

Read more »

Women's fashion boutique Aritzia is a top stock to buy in September 2022.
Stocks for Beginners

Aritzia’s Latest Numbers: Is This Canadian Fashion Icon a Must-Buy?

Aritzia’s consistently strong financial performance clearly highlights its long-term growth potential.

Read more »

man touches brain to show a good idea
Investing

Value Investors: Here’s Where I’m Hunting in 2025

Spin Master (TSX:TOY) and another mid-cap value stock are worth watching this year.

Read more »

coins jump into piggy bank
Dividend Stocks

Dividend Seekers: Should You Buy Alaris Equity Stock for its 7.1% Yield?

Some dividend stocks just seem like one great deal, while others look too good to be true. So which is…

Read more »

Asset Management
Stocks for Beginners

2 TSX Champions Poised for Exceptional Long-Term Returns

These two TSX stocks with exceptional long-term growth potential offer great value right now.

Read more »