In this article, we will take a look at the 10 Best Canadian Stocks to Buy.
An Exchange Traded Fund (ETF) is a type of pooled investment vehicles that holds multiple underlying assets including stocks, commodities, or bonds, and provides access to a larger basket of securities with low expense ratios and broker commissions. As the name suggests, ETFs are traded on a stock exchange and can be bought and sold similar to any other stocks traded on the exchange. Passively managed ETFs generally track an underlying index to replicate its performance, such as the SPDR Dow Jones Industrial Average ETF Trust which tracks the Dow Jones Industrial Average index, and SPDR S&P 500 ETF which tracks the S&P 500 index.
The iShares MSCI Canada ETF, traded on NYSE Arca exchange, seeks to track the investment results of MSCI Canada Custom Capped Index, an index composed of Canadian equities. The Index is designed to measure the equity performance of Canadian publicly listed companies and comprises of 88 large and midsized companies based in Canada. As of June 30, 2022, the ETF had an annualized total return of 7.02% over the course of last 5 years, and 7.80% since inception in 1996.
As of August 31, 2022, the portfolio was heavily concentrated with stocks from the Financials sector, accounting for a cumulative 36.46% weightage, followed by Energy at 19.67%, and Industrials at 11.85%.
Global markets have been going through a rough patch with fears of an upcoming recession due to inflation and aggressive monetary policies implemented by central banks. If economic data doesn’t meet expectations, global markets and stock prices could fall further. Canada’s equity sector, heavily weighted with energy and minerals companies, has fared comparatively better due to strength in commodity markets. If commodity prices decline, the stock prices of many commodity producers could decline. If commodity prices rise, however, Canadian stocks could do well.
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Methodology
For our list, we took the top 25 stocks by portfolio weight of the iShares MSCI Canada ETF as of September 19 that were listed on either the NYSE or NASDAQ and we sorted them based on the number of hedge funds in our database which held shares in the same stock as of Q2 2022. Of those, we took the top 10.
10 Best Canadian Stocks to Buy
10. Agnico Eagle Mines Limited (NYSE:AEM)
Percentage of iShares MSCI Canada ETF: 1.06%
Number of Hedge Fund Holders: 31
Agnico Eagle Mines Limited (NYSE:AEM) is a gold mining company based in Toronto, Ontario. With a history dating back to 1957, Agnico Eagle Mines Limited (NYSE:AEM) operates mines in Canada, Australia, Finland, and Mexico. It also has a pipeline of high-quality exploration and development projects in these countries as well as in the United States and Colombia.
In July, the board of directors of Agnico Eagle Mines Limited (NYSE:AEM) declared a quarterly cash dividend of $0.40 per share. The mining company has declared cash dividends every year since 1983. Earlier in September, Goldman Sachs analyst Emily Chieng initiated coverage of Agnico Eagle Mines Limited (NYSE:AEM) shares with a price target of C$72 per share and a ‘Buy’ rating.
As of Q2 2022, 31 out of the 895 hedge funds tracked by Insider Monkey were bullish on Agnico Eagle Mines Limited (NYSE:AEM) and held its shares valued at $1.4 billion. GQG Partners was the largest shareholder holding 17.5 million shares valued at $798 million.
Alongside Suncor Energy Inc. (NYSE:SU), Nutrien Ltd. (NYSE:NTR), and Shopify Inc. (NYSE:SHOP), Agnico Eagle Mines Limited (NYSE:AEM) is a Canadian stock that’s widely held by many hedge funds in our database at the end of Q2 2022.
9. Canadian Natural Resources Limited (NYSE:CNQ)
Percentage of iShares MSCI Canada ETF: 3.57%
Number of Hedge Fund Holders: 33
Calgary, Alberta-based Canadian Natural Resources Limited (NYSE:CNQ) is one of the largest independent crude oil and natural gas producers in the world, focused on natural gas, light oil, heavy oil, in situ oil sands production and oil sands mining
In August, Canadian Natural Resources Limited (NYSE:CNQ) released the financial results for Q2 2022. Its revenue increased by 69% y-o-y to $8.9 billion, while its net income surged by 117% y-o-y to $2.7 billion, for the three months ended June 30, 2022. It reported a normalized EPS of $2.54 for the quarter, beating the consensus by $0.21.
Canadian Natural Resources Limited (NYSE:CNQ) declared a regular quarterly cash dividend of C$0.75 per share, and a special dividend of C$1.50 per share.
As of Q2 2022, 33 hedge funds out of the 895 hedge funds tracked by Insider Monkey held shares of Canadian Natural Resources Limited (NYSE:CNQ), valued at $2.3 billion. Its largest shareholder was Yacktman Asset Management with ownership of 16.9 million shares valued at $907 million.
8. Brookfield Asset Management Inc. (NYSE:BAM)
Percentage of iShares MSCI Canada ETF: 3.82%
Number of Hedge Fund Holders: 34
Brookfield Asset Management Inc. (NYSE:BAM) is a leading global alternative asset manager with approximately $750 billion of assets under management across real estate, infrastructure, renewable power and transition, private equity, and credit.
In June, Brookfield Asset Management Inc. (NYSE:BAM) announced that it had reached the final close for its inaugural Brookfield Global Transition Fund with $15 billion total capital raised. The fund is dedicated to facilitating the global transition to a net-zero carbon economy.
As of Q2 2022, 34 of the 895 hedge funds tracked by Insider Monkey owned shares of Brookfield Asset Management Inc. (NYSE:BAM), valued at $1.8 billion. Its largest shareholder was Charles Akre’s Akre Capital Management with ownership of 13.3 million shares valued at $592 million.
7. Barrick Gold Corporation (NYSE:GOLD)
Percentage of iShares MSCI Canada ETF: 1.49%
Number of Hedge Fund Holders: 40
Barrick Gold Corporation (NYSE:GOLD), based in Toronto, Ontario, is a sector-leading gold and copper producer, operating mines, and projects in 18 countries in North and South America, Africa, Papua New Guinea, and Saudi Arabia.
In August, Barrick Gold Corporation (NYSE:GOLD) released its financial results for the quarter ended June 30, 2022. Its total revenue declined by 1% y-o-y to $2.9 billion, while its net income increased by 3% y-o-y to $717 million, for the three months. The normalized EPS was recorded at $0.24 for the quarter, beating the consensus by $0.02, and declared a quarterly cash dividend of $0.20 per share.
On September 12, Goldman Sachs analyst Emily Chieng initiated coverage of Barrick Gold Corporation (NYSE:GOLD) with a price target of $18 per share and a ‘Neutral’ rating.
As of Q2 2022, 40 of the 895 hedge funds tracked by Insider Monkey were long Barrick Gold Corporation (NYSE:GOLD), holding shares worth $1.1 billion. Its largest hedge fund shareholder is First Eagle Investment Management with ownership of 26.6 million shares valued at $471 million.
6. Canadian National Railway Company (NYSE:CNI)
Percentage of iShares MSCI Canada ETF: 3.94%
Number of Hedge Fund Holders: 41
Montreal, Quebec-based Canadian National Railway Company (NYSE:CNI) is a North American transportation and logistics leader offering integrated shipping solutions, including rail, intermodal, trucking, freight forwarding, warehousing and distribution. Its rail network comprises nearly 20,000 route-miles of track connecting three coasts: the Atlantic, the Pacific and the Gulf of Mexico.
On September 12, BofA analyst Ken Hoexter upgraded Canadian National Railway Company (NYSE:CNI) to ‘Buy’ rating from ‘Neutral’ and increased the price target on its shares to $135 from $128 as “hiring rebounds and that volumes have inflected positively.”
As of Q2 2022, 41 of the 895 hedge funds tracked by Insider Monkey owned shares of Canadian National Railway Company (NYSE:CNI), valued at $7.5 billion. Chris Hohn’s TCI Fund Management is its largest shareholder with ownership of 36.7 million shares valued at $4.1 billion.
Like Canadian National Railway Company (NYSE:CNI), Suncor Energy Inc. (NYSE:SU), Nutrien Ltd. (NYSE:NTR), and Shopify Inc. (NYSE:SHOP) are Canadian stocks that are held by many hedge funds in our database as of Q2 2022.
5. Cenovus Energy Inc. (NYSE:CVE)
Percentage of iShares MSCI Canada ETF: 1.47%
Number of Hedge Fund Holders: 42
Cenovus Energy Inc. (NYSE:CVE) is an integrated oil and natural gas company based in Calgary, Alberta. Operations of Cenovus Energy Inc. (NYSE:CVE) include oil sands projects in Alberta, crude oil and natural gas projects across Western Canada, crude oil production offshore Newfoundland and Labrador and natural gas and liquids production offshore China and Indonesia, and downstream operations including upgrading, refining, and marketing operations in Canada and the United States.
Cenovus Energy Inc. (NYSE:CVE) announced in August that it had agreed to acquire the remaining 50% stake in Toledo Refinery from bp for a total consideration of $300 million. Earlier in June, the energy company had announced an agreement to acquire remaining 50% stake in Sunrise oil sands project in northern Alberta from bp.
As of Q2 2022, 42 of the 895 hedge funds tracked by Insider Monkey owned shares of Cenovus Energy Inc. (NYSE:CVE), valued at $2.9 billion. Soroban Capital Partners is its largest shareholder with ownership of 50.3 million shares valued at $957 million.
4. Canadian Pacific Railway Limited (NYSE:CP)
Percentage of iShares MSCI Canada ETF: 3.93%
Number of Hedge Fund Holders: 42
Based in Calgary, Alberta, Canadian Pacific Railway Limited (NYSE:CP) is a transcontinental railway in Canada and the United States with direct links to major ports on the west and east coasts. It offers a suite of freight transportation services, logistics solutions and supply chain expertise.
Earlier this year in July, Canadian Pacific Railway Limited (NYSE:CP) released its financial results for the quarter ended June 30, 2022. Its total revenues increased by 3% y-o-y to $1.7 billion, while it reported net earnings of $594 million, for the three months. The normalized EPS was recorded at $0.74 per share, beating the consensus by $0.01. The company declared a cash dividend of $0.15 per share for the quarter.
On September 12, BofA analyst Ken Hoexter upgraded Canadian Pacific Railway Company (NYSE:CP) to ‘Buy’ rating from ‘Neutral’ and increased the price target on its shares to $87 from $85 as “hiring rebounds and that volumes have inflected positively.”
As of Q2 2022, 42 hedge funds tracked by Insider Monkey held shares of Canadian Pacific Railway Limited (NYSE:CP), worth $7 billion. Chris Hohn’s TCI Fund Management is its largest hedge fund shareholder with ownership of 55.9 million shares valued at $3.9 billion.
3. Suncor Energy Inc. (NYSE:SU)
Percentage of iShares MSCI Canada ETF: 2.62%
Number of Hedge Fund Holders: 47
Calgary, Alberta-based Suncor Energy Inc. (NYSE:SU) is an integrated energy company with operations across oil sands development, production and upgrading, offshore oil and gas production, petroleum refining in Canada and the United States and its Petro-Canada retail and wholesale distribution networks.
In August, Suncor Energy Inc. (NYSE:SU) reported the financial results for the quarter ended July 31, 2022. Its revenue increased by 70% y-o-y to $12.5 billion, while it generated a net income of $3.1 billion, for the quarter. It reported a normalized EPS of $2.11 for the quarter, beating the consensus by $0.02.
On August 8, Credit Suisse analyst William Janela assumed coverage of Suncor Energy Inc. (NYSE:SU) with an ‘Outperform’ rating and unchanged price target of C$63.
According to the Insider Monkey data on 895 leading hedge funds, 47 hedge funds were long Suncor Energy Inc. (NYSE:SU) shares as of Q2 2022, with the total shares held by hedge funds valued at $2.4 billion. Arrowstreet Capital was the largest shareholder on record with ownership of 16.6 million shares valued at $583 million.
2. Nutrien Ltd. (NYSE:NTR)
Percentage of iShares MSCI Canada ETF: 2.86%
Number of Hedge Fund Holders: 48
Saskatoon, Saskatchewan-based Nutrien Ltd. (NYSE:NTR) is a leading producer and retailer of potash, nitrogen, and phosphate products for agricultural, industrial, and feed customers world-wide. It produces more than 27 million tons of these products on an annual basis and sells it through its retail network that services more than 0.5 million grower accounts.
In August, Nutrien Ltd. (NYSE:NTR) released its financial results for the quarter ended June 30, 2022. Its sales increased by 49% y-o-y to $14.5 billion, while its net income surged by 224% y-o-y to $3.6 billion, for the three months. It reported a normalized EPS of $5.85 for the quarter, beating the consensus by $0.15. Nutrien Ltd. (NYSE:NTR) declared a regular cash dividend of $0.48 per share for the quarter.
On August 8, Barclays analyst Benjamin Theurer lowered the price target on Nutrien Ltd. (NYSE:NTR) shares to $105 from $126 but maintained an ‘Overweight’ rating on the shares. The analyst is confident in the retail business of Nutrien Ltd. (NYSE:NTR) based on its “strong 2022 performance and customer retention.”
Nutrien Ltd. (NYSE:NTR) is among the Canadian favorites of hedge funds, with 48 of the 895 hedge funds tracked by Insider Monkey holding its shares valued at $1.1 billion. First Eagle Investment Management was its biggest shareholder with ownership of 8.4 million shares valued at $668 million.
1. Shopify Inc. (NYSE:SHOP)
Percentage of iShares MSCI Canada ETF: 2.04%
Number of Hedge Fund Holders: 60
Shopify Inc. (NYSE:SHOP) is a leading provider of internet infrastructure for commerce, offering trusted tools to start, grow, market, and manage a retail business of any size. Shopify Inc. (NYSE:SHOP) platform and services are used by millions of businesses across 175 countries, including notable names such as Gymshark, Heinz, Tupperware, FTD, Netflix, FIGS, and others.
In July, Shopify Inc. (NYSE:SHOP) reported its earnings for the quarter ended June 30, 2022. Its revenue increased by 16% y-o-y to $1.3 billion, while it reported a net loss of $1.2 billion, for the three months. It recorded an EPS of -$0.03, missing the analyst consensus by $0.06.
On August 11, Atlantic Equities analyst Kunaal Malde upgraded Shopify Inc. (NYSE:SHOP) to ‘Overweight’ from ‘Neutral’ with a $46 price target. The analyst believes that Shopify Inc. (NYSE:SHOP) is “a market leader in product innovation and a high-quality market share gainer”.
As of Q2 2022, Shopify Inc. (NYSE:SHOP) is the most sought-after Canadian stock among the 895 hedge funds tracked by Insider Monkey, as 60 of these hedge funds held its shares, valued at $3.3 billion. Ken Griffin’s Citadel Investment Group was the largest shareholder in the company.
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Disclosure: None. 10 Best Canadian Stocks to Buy is originally published on Insider Monkey.
