Amid the uncertainty surrounding equity markets due to protectionist policies, the S&P/TSX Composite Index is down 1.5% over the last month. However, year-to-date, the index is up 1.1%. Meanwhile, the following three Canadian stocks have bucked the downtrend and continued enhancing shareholder returns, given their solid financials and healthy growth prospects.
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Celestica
Celestica (TSX:CLS) is an electronics manufacturing services company that offers design, manufacturing, hardware platform, and supply chain solutions to various customers worldwide. The company has witnessed healthy buying over the last couple of years. After delivering impressive returns of over 240% last year, CLS stock is trading over 40% higher year-to-date. A solid fourth-quarter performance and healthy growth prospects have increased its stock price.
Celestica reported impressive fourth-quarter earnings last month, with its topline growing by 19% to $2.6 billion. The solid performance from its CCS (Connectivity & Cloud Solutions) segment, which rose 30% year-over-year, boosted its financial growth. However, the revenue from its ATS (Advanced Technology Solutions) segment remained flat for the quarter. Nonetheless, its adjusted EPS (earnings per share) was $1.11, representing a 44.2% increase from the previous year.
Moreover, Celestica has recently acquired two new projects from a hyperscaler and a digital company. Celestica will support its customers in building fully AI-optimized networking racks and servers in these projects. The company could also benefit from ongoing investments in expanding AI-ready data centres. Despite these healthy growth prospects, CLS trades at reasonable NTM (next 12 months) price-to-sales and price-to-earnings multiples of 1.5 and 27.4, respectively, making it an excellent buy.
Shopify
Second on my list is Shopify (TSX:SHOP), which has also continued its uptrend from last year to raise its stock price by 19% year-to-date. Earlier this month, it reported an impressive fourth-quarter performance, with its GMV (gross merchandise value) growing by 25.7% to $94.5 billion.
Shopify’s topline grew by 31% to $2.8 billion, marking the seventh consecutive quarter of above 25% revenue growth. Rising GMV, revenue growth in subscription solutions amid an expanding customer base, and increasing penetration of its payment solutions boosted its topline. Further, its operating income rose 60.9% to $465 million, while its free cash flows increased by 37% to $611 million. Also, the company’s free cash flow margin expanded by 100 basis points to 22%.
Moreover, the demand for Shopify’s products could continue to rise amid growing omnichannel selling, its geographical expansion, and increasing penetration of its payment solutions. Meanwhile, the company’s management expects its topline to grow in the mid-twenties in the first quarter of fiscal 2025, while its free cash flow margin will be in the mid-teens. Considering its healthy growth prospects, I expect the uptrend in Shopify to continue.
Waste Connections
My third pick would be Waste Connections (TSX:WCN), which is up 8.6% year-to-date. The essential nature of its business, solid fourth-quarter performance, and continued expansion through acquisitions have boosted its stock price. Earlier this month, it reported an impressive fourth-quarter performance, with its topline growing by 11% to $2.3 billion. The company completed record acquisitions last year, contributing $750 million in annualized revenue. Along with these contributions, price-led organic growth boosted its revenue.
Besides, integrating acquired entities and improving employee engagement and retention boosted its adjusted EBITDA, which rose 11.6%. Also, its adjusted EBITDA margin expanded by 20 basis points to 32.4%. Moreover, the management expects the uptrend in its financials to continue driven by price-led organic growth, higher commodity prices, and ongoing acquisitions. It expects its 2025 revenue to be between $9.4–9.6 billion, with the midpoint representing a 6.8% year-over-year increase. The management also hopes for an 80 basis points expansion in its adjusted EBITDA margin to 33.3% while generating free cash flows between $1.30–$1.35 billion. Considering its solid underlying business and healthy growth prospects, I expect the WCN stock price rally to continue.
