After a disappointing start to this month, the Canadian equity markets have witnessed healthy buying over the last few days. The lower-than-expected inflation in the United States has raised the hopes of interest rate cuts by the Federal Reserve, thus driving the equity markets higher. Amid improving investor sentiments, here are five top Canadian stocks you can buy without hesitation.
goeasy
goeasy (TSX:GSY) is a Canadian subprime lender that has grown its financials at a healthier rate for the last two decades. Despite the strong growth, it has acquired just 2% of the $218 billion Canadian subprime market. Given its expanded product offerings, solid distribution channels, and impressive digital infrastructure, the company hopes to expand its market share.
The falling interest rates and easing inflation could boost economic activities, thus driving credit demand and expanding the addressable market for goeasy. Meanwhile, the company’s management expects its loan portfolio to reach $6 billion by 2026, representing a 45% increase from its June-ending levels. The expansion could grow its top line at an annualized rate of 14% through 2026 while expanding its operating margin to 42%. Given its healthy growth prospects, I am bullish on goeasy.
Dollarama
Dollarama (TSX:DOL) operates 1,569 stores at convenient locations across the country. Given its superior direct sourcing and efficient logistics, the company offers several consumer products at attractive prices, thus enjoying healthy same-store sales even during challenging environments. Further, the company is expanding its footprint and expects to reach a store count of 2,000 by the end of 2031.
Besides, it recently hiked its stake in Dollarcity, a value retailer in Latin America, from 50.1% to 60.1%. Further, Dollarcity plans to add around 500 stores over the next six years. Considering all these factors, Dollarama’s financial growth could continue, driving its stock price.
Waste Connections
Another TSX stock you can buy without any hesitation is Waste Connections (TSX:WCN). The waste management company operates in the secondary and exclusive markets of the United States and Canada, thus facing lesser competition and enjoying higher margins. Meanwhile, the company is constructing several renewable natural gas and resource recovery facilities, which could become operational over the next few years.
The company has made 18 acquisitions year-to-date, which could contribute $500 million to its annualized revenue. Meanwhile, the management expects to continue with its M&A (merger and acquisitions) in the second half to increase the revenue contribution for its acquisitions to $700 million by the end of this year. So, its growth prospects look healthy.
Fortis
Fourth on my list is Fortis (TSX:FTS), an electric and natural gas utility company that serves 3.5 million customers in Canada, the United States, and the Caribbean. With around 99% of its assets regulated, the company’s financials are less susceptible to market volatility. Supported by its healthy cash flows, the company has increased its dividends for 50 consecutive years, with its forward yield at 4%.
Meanwhile, Fortis is progressing with its $25 billion capital plan, which extends from 2024 to 2028. These investments could deliver annualized rate base growth of 6.3% through 2028, boosting its financials. Moreover, the central bank has slashed interest rates twice this year, and investors are hopeful of one more cut this year. Given its capital-intensive business, lower interest rates could reduce its interest burden, thus improving its profitability.
Enbridge
Enbridge (TSX:ENB) operates a highly contracted midstream energy business, with around 98% of its cash flows generated from long-term cost-of-service contracts. With around 80% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) inflation-indexed, its financials are less susceptible to an inflationary environment. So, the company generates stable and predictable cash flows, allowing it to raise its dividends for 29 previous years at an annualized rate of 10%.
Moreover, Enbridge has expanded its footprint in the natural gas utility space by acquiring two assets in the United States and is working on completing the third deal. Further, it is growing its asset base through $24 billion in secured capital, with an annual deployment of $6-$7 billion. Given its healthy growth prospects and stable cash flows, Enbridge could continue its dividend growth, making it an excellent buy.
