In this article, we discuss 10 best TSX stocks to buy now.

Finance Minister Chrystia Freeland warned Canadians on October 19, saying the next few months will be hard as increasing interest rates erode a once-thriving economy and force people into unemployment. Freeland noted that ​​The Bank of Canada’s latest rate hikes to control rampant inflation will raise borrowing costs for businesses and consumers alike, which will send tremors of shock through the economy in the near-term. 

The Bank of Canada, like the United States’ Federal Reserve, aims to target price stability and bring inflation down to 2%. This attempt by the central bank could trigger a recession in 2023. While the finance minister said that the government cannot possibly compensate every Canadian who is impacted by the skyrocketing inflation, the most vulnerable people will be helped so they can cover the rising costs of food and rent. Freeland highlighted the passage of Bill C-30, a government legislation to double the GST credit paid to low-income households for a while. 

Canadian consumer confidence fell to an all-time low apart from the last two economic crises, which increases the likelihood of a recession. Amid a chaotic market environment, notable equities listed on the Toronto Stock Exchange are trading at significant discounts. While investors usually pile into defensive names like The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO) in a volatile market, it is a good idea to jump into some TSX stocks for broader exposure.

Our Methodology 

We selected the best TSX stocks based on positive analyst coverage, strong underlying business fundamentals, and future growth prospects once the market gains momentum. We have assessed the hedge fund sentiment from Insider Monkey’s database of 895 elite hedge funds tracked as of the end of the second quarter of 2022. 

Best TSX Stocks To Buy Now

10. Royal Bank of Canada (TSX:RY.TO)

Number of Hedge Fund Holders: 12

Royal Bank of Canada (TSX:RY.TO) was founded in 1864 and is headquartered in Toronto, Canada. It is a diversified financial service company working worldwide, operating through Personal & Commercial Banking, Wealth Management, Insurance, Investor & Treasury Services, and Capital Markets segments. On October 4, Royal Bank of Canada (TSX:RY.TO) announced that it has acquired MDBilling.ca, a cloud-based platform that automates and simplifies medical billing for doctors in Canada. This acquisition advances RBC’s existing medical billing firm portfolio.

On September 29, Barclays analyst John Aiken reinstated coverage of Royal Bank of Canada (TSX:RY.TO) with an Overweight rating and a C$137 price target after the conclusion of the Brewin Dolphin acquisition. The purchase of the discretionary wealth manager places Royal Bank of Canada (TSX:RY.TO) in the top three asset managers in the U.K. and Ireland, the analyst told investors in a research note.

According to Insider Monkey’s Q2 data, 12 hedge funds were long Royal Bank of Canada (TSX:RY.TO), compared to 21 funds in the last quarter. D E Shaw held a notable position in the company, comprising 342,394 shares worth $33 million. 

In addition to The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO), Royal Bank of Canada (TSX:RY.TO) is one of the best stocks to consider for a balanced portfolio. 

Here is what Gator Capital Management has to say about Royal Bank of Canada (TSX:RY.TO) in its Q1 2021 investor letter:

“We own a position in Royal Bank of Canada (“RBC”) and are completing our due diligence on several other Canadian banks. Royal Bank is the #1 bank in Canada. It has a business mix similar to JP Morgan Chase (“JPM”) with strong retail and corporate banking businesses. It also has a significant investment banking and asset management business. From here, we believe Canadian bank stocks will generate attractive returns for shareholders in the medium and long term.

Here is more detail on our investment thesis for Royal Bank of Canada:

1. Bank with consistently high returns – RBC consistently posts Return on Tangible Common Equity (“ROTCE”) in the low 20%. In contrast, JPM has reported ROTCE between 12% and 19% over the last six years. We think this reflects the higher margins of the Canadian banking system.

2. Leading bank in Canada – RBC is the leading bank in Canada. It has the highest returns, the highest market share, and the highest valuation of the five major Canadian banks. We believe other stock market investors will favor RBC when Canadian banks regain favor.

3. Low relative valuation to US Banks – Canadian banks have had premium valuations compared to US banks for a few decades due to their higher and more consistent returns. Over the last 10 years, this valuation premium has almost disappeared. The chart below shows the price-to-tangible book ratio (“P/TB”) of RBC compared to JPM’s. As you can see, in 2011 RBC traded at 3x P/TB while JPM traded at 1x. Now, both banks trade at 2.5x P/TB.

4. Strong growth at City National – RBC’s US Subsidiary, City National Bank, is growing very quickly. RBC purchased City National in 2015. City National was an LA-based bank focused on high-net-worth customers. At the time of the purchase, City National had already expanded and gained traction in San Francisco and New York. Now, City National has branches in Washington, DC, Atlanta, Miami, Dallas, Minneapolis, San Diego, and Las Vegas. City National has a banking strategy similar to that of First Republic and is growing at a comparable rate. We would note that First Republic trades at 26x 2021 estimated earnings. (Click to read full text)

9. Bank of Montreal (TSX:BMO.TO)

Number of Hedge Fund Holders: 12

Bank of Montreal (TSX:BMO.TO), a diversified financial services firm primarily operating in North America, is one of the best TSX stocks to buy. The company provides personal banking products, cash management solutions, foreign exchange, specialized banking programs, treasury and payment solutions, and risk management products, among other financial services. On August 30, Bank of Montreal (TSX:BMO.TO) declared a C$1.39 per share quarterly dividend, in line with previous. The dividend is payable on November 28, to shareholders of record as of November 1. The forward yield was 4.36%. 

On October 21, Bank of Montreal (TSX:BMO.TO) disclosed a domestic public offering of $750 million of 6.534% subordinated notes due 2032 through its Canadian Medium-Term Note Program. Interest on notes will be paid bi-annually until October 27, 2027 and at Daily Compounded CORRA plus 2.70% thereafter, on a quarterly basis, until their maturity on October 27, 2032. The offering will close on October 27, 2022 and the proceeds will be utilized for general banking purposes.

Desjardins analyst Doug Young on September 1 maintained a Buy rating on Bank of Montreal (TSX:BMO.TO) but lowered the price target on the shares to C$150 from C$153. 

According to Insider Monkey’s data, Bank of Montreal (TSX:BMO.TO) was part of 12 hedge fund portfolios at the end of Q2 2022, compared to 15 in the earlier quarter. Israel Englander’s Millennium Management held the leading stake in the company, comprising 538,483 shares worth about $52 million. 

8. TELUS Corporation (TSX:T.TO)

Number of Hedge Fund Holders: 15

TELUS Corporation (TSX:T.TO) is a Vancouver-based company that provides telecommunications and information technology products and services in Canada. It operates through Technology Solutions and Digitally-Led Customer Experiences segments. The company has nearly 17 million subscriber connections, including mobile phone subscribers, connected device subscribers, internet subscribers, residential voice subscribers, TV subscribers, and security subscribers. TELUS Corporation (TSX:T.TO) is one of the best TSX stocks to buy now. 

On October 18, TELUS Corporation (TSX:T.TO) announced that it is introducing a new online platform to commemorate Small Business Month this October. The new platform, ShopWithOwners.ca, will support Canadian business owners in terms of gaining exposure to customers seeking locally made gifts during the holiday season. 

Investment advisory Scotiabank on October 11 maintained an Outperform rating on TELUS Corporation (TSX:T.TO) but trimmed the price target on the shares to C$31.50 from C$34.50. Analyst Maher Yag issued the ratings update. 

According to Insider Monkey’s second quarter database, 15 hedge funds held stakes worth $256.5 million in TELUS Corporation (TSX:T.TO), compared to 15 funds in the earlier quarter worth $212 million. Jim Simons’ Renaissance Technologies held the leading stake in the company, comprising 3.7 million shares valued at $82.4 million. 

7. Thomson Reuters Corporation (TSX:TRI.TO)

Number of Hedge Fund Holders: 22

Thomson Reuters Corporation (TSX:TRI.TO) is a Toronto-based company offering business information services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates through five segments – Legal Professionals, Corporates, Tax & Accounting Professionals, Reuters News, and Global Print. It is one of the premier TSX stocks to invest in.

Canaccord analyst Aravinda Galappatthige on August 5 raised the price target on the shares to $122 from $115 and reiterated a Buy rating on the shares. The analyst believes the 2023 outlook remains achievable and potentially beatable despite the tough macro environment. 

According to the second quarter database of Insider Monkey, 22 hedge funds held stakes worth $351.6 million in Thomson Reuters Corporation (TSX:TRI.TO), compared to 23 funds in the last quarter worth $315 million. Ken Griffin’s Citadel Investment Group is a prominent position holder in the company, with 556,746 shares valued at $58 million. 

6. Rogers Communications Inc. (TSX:RCI-B.TO)

Number of Hedge Fund Holders: 29

Rogers Communications Inc. (TSX:RCI-B.TO) was founded in 1960 and is headquartered in Toronto, Canada. It operates as a communications and media company in Canada, offering mobile Internet access, wireless voice and enhanced voice, device protection, global voice and data roaming, bridging landline, and machine-to-machine and Internet of Things solutions. 

On October 17, Rogers Communications Inc. (TSX:RCI-B.TO) announced that it intends to merge with Shaw Communications Inc. (TSX:SJR-B.TO) and the company will present its case to Canada’s Competition Bureau between October 27 and October 28. The deal has received approval by Shaw shareholders, the court, and the Canadian Radio-television and Telecommunications Commission. However, the Competition Bureau has sued to block the transaction.

Scotiabank analyst Maher Yaghi on October 11 reiterated an Outperform rating on Rogers Communications Inc. (TSX:RCI-B.TO) but lowered the price target on the shares to C$69.50 from C$72.50. 

According to Insider Monkey’s data, 29 hedge funds were long Rogers Communications Inc. (TSX:RCI-B.TO) at the end of Q2 2022, compared to 14 funds in the preceding quarter. Joseph Sirdevan’s Galibier Capital Management is a significant position holder in the company, with 829,157 shares worth nearly $40 million.  

In addition to safe investments like The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO), elite hedge funds are piling into Rogers Communications Inc. (TSX:RCI-B.TO).

Here is what Diamond Hill International Fund Concentrated Fund has to say about Rogers Communications Inc. (TSX:RCI-B.TO) in its Q1 2022 investor letter:

“Rogers Communications reported a solid Q4 as the firm continues to recover from prior COVID-related pressures on service revenue and customer acquisition. The resolution of recent board-level discord also may have contributed to the share price appreciation during the quarter.”

5. Agnico Eagle Mines Limited (TSX:AEM.TO)

Number of Hedge Fund Holders: 31 

Agnico Eagle Mines Limited (TSX:AEM.TO) is a Toronto-based company engaged in the exploration, development, and production of mineral properties in Canada, Mexico, and Finland. The company primarily produces gold, silver, zinc, and copper. On September 16, Agnico Eagle Mines Limited (TSX:AEM.TO) announced that it has agreed to subscribe for a 50% interest in Minas de San Nicolás (MSN) in Mexico, a wholly-owned subsidiary of Teck Resources Limited (NYSE:TECK). According to the agreement, Agnico Eagle Mines Limited (TSX:AEM.TO) will subscribe for $580 million of MSN shares. 

On October 17, Barclays analyst Matthew Murphy raised the price target on Agnico Eagle Mines Limited (TSX:AEM.TO) to $63 from $62 and reiterated an Overweight rating on the shares. The analyst prefers gold equities over base metals amid slowing global growth.

According to Insider Monkey’s Q2 data, 31 hedge funds were long Agnico Eagle Mines Limited (TSX:AEM.TO), compared to 38 funds in the prior quarter. Rajiv Jain’s GQG Partners is the largest stakeholder of the company, with 17.4 million shares worth $798.45 million. 

4. Waste Connections, Inc. (TSX:WCN.TO)

Number of Hedge Fund Holders: 34

Waste Connections, Inc. (TSX:WCN.TO) is based in Woodbridge, Canada, and the company provides non-hazardous waste collection, transfer, disposal, and resource recovery services in the United States and Canada. On August 4, Waste Connections, Inc. (TSX:WCN.TO) announced an underwritten public offering of senior unsecured notes, and the net proceeds will be used to repay a part of the outstanding debt under its revolving credit facility. It is one of the best TSX stocks to buy now. 

On October 24, Jefferies analyst Stephanie Moore initiated coverage of Waste Connections, Inc. (TSX:WCN.TO) with a Buy rating and a $165 price target. The analyst said the stock is best-in-class in the waste industry, with above average pricing growth and margins due to its suburban end markets, as well as the exclusivity from its franchise contracts. She sees at least low double digit revenue growth for Waste Connections, Inc. (TSX:WCN.TO) in 2023.

According to Insider Monkey’s data, 34 hedge funds were long Waste Connections, Inc. (TSX:WCN.TO) at the end of June 2022, compared to 35 funds in the prior quarter. Henry Ellenbogen’s Durable Capital Partners is the biggest stakeholder of the company, with nearly 2 million shares worth $239.2 million. 

3. Barrick Gold Corporation (TSX:ABX.TO)

Number of Hedge Fund Holders: 40

Barrick Gold Corporation (TSX:ABX.TO) is a Toronto-based company specializing in the exploration, development, production, and sale of gold and copper properties. The company’s gold mines are located in Argentina, Canada, Côte d’Ivoire, the Democratic Republic of Congo, Dominican Republic, Mali, Tanzania, and the United States. Barrick Gold Corporation (TSX:ABX.TO) announced that it remains on track to achieve FY 2022 production guidance, with gold forecasted at the low end of the guidance and copper expected at the midpoint. The company is also making “steady progress” towards the final agreements and legal steps which will enable the development of the $7 billion Reko Diq gold project in Pakistan.

On October 19, Stifel analyst Ingrid Rico maintained a Buy rating on Barrick Gold Corporation (TSX:ABX.TO) but trimmed the price target on the shares to C$33 from C$35.25. 

As per Insider Monkey’s data, 40 hedge funds were bullish on Barrick Gold Corporation (TSX:ABX.TO) at the end of June 2022, compared to 45 funds in the last quarter. It is one of the best TSX stocks to buy according to elite hedge funds. 

2. Cenovus Energy Inc. (TSX:CVE.TO)

Number of Hedge Fund Holders: 42

Cenovus Energy Inc. (TSX:CVE.TO) was founded in 2009 and is headquartered in Calgary, Canada. The company develops, produces, and markets crude oil, natural gas liquids, and natural gas in Canada, the United States, and the Asia Pacific region. The company operates through Oil Sands, Conventional, Offshore, Canadian Manufacturing, U.S. Manufacturing, and Retail segments. Cenovus Energy Inc. (TSX:CVE.TO) is one of the premier TSX stocks to buy. 

On October 19, Jefferies analyst Lloyd Byrne initiated coverage of Cenovus Energy Inc. (TSX:CVE.TO) with a Buy rating and a C$35 price target. He believes the “Option Value” of energy is up again, supported by a restricted capital cycle. While this is most apparent in oil and gas, it is also evident in energy transition firms, noted the analyst, who believes energy’s “Option Value can stay higher for longer” without a meaningful increase in investment across the industry. 

According to Insider Monkey’s data, 42 hedge funds held stakes worth $2.90 billion in Cenovus Energy Inc. (TSX:CVE.TO) at the end of the second quarter of 2022, compared to 44 funds in the prior quarter worth $2.4 billion. Eric W. Mandelblatt’s Soroban Capital Partners is the biggest position holder in the company, with 50.3 million shares worth about $957 million. 

Here is what L1 Capital specifically said about Cenovus Energy Inc. (TSX:CVE.TO) in its Q2 2022 investor letter:

“MEG Energy and Cenovus Energy Inc. (NYSE:CVE): We continue to remain positive on the outlook for Energy. While a potential U.S. recession would result in softer oil demand, we believe this would be more than outweighed by China reopening over the coming year (which would see a major lift in car and air traffic). Oil supply continues to remain constrained with sustained declines in global inventories and OPEC+ remains unable to grow production significantly. With the sell-off in energy stocks, MEG and Cenovus are currently generating more than 20% of their market cap in cash flow with large dividends and share buybacks to come.

Cenovus Energy (Long +14%) shares rallied, driven by continued strong free cash flow generation, as well as being positioned to benefit from strong refining margins and downstream operations. The company recently announced a significant increase in dividends, which gives us greater confidence on the potential for a 100% return of free cash flow generation via dividends and buybacks from early CY23. Given the long-life nature of its oil sand assets and its low cost of production, we estimate the company is free cash flow break-even at an oil price of ~US$40/bbl. At present, oil prices are more than double this break-even point, implying considerable upside to consensus cash flow estimates (if prices remain near current levels). There are also additional value realization catalysts with the company continuing to progress the de-gearing of its balance sheet via organic cash generation and asset sales.”

1. Shopify Inc. (NYSE:SHOP.TO)

Number of Hedge Fund Holders: 60

Shopify Inc. (NYSE:SHOP.TO) is one of the best TSX stocks to invest in. The company provides a commerce platform and related services in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. On October 7, The European Commission reported that Shopify Inc. (NYSE:SHOP.TO) has agreed to boost consumer protections after receiving multiple complaints. 

On October 21, RBC Capital analyst Paul Treiber reaffirmed an Outperform rating on Shopify Inc. (NYSE:SHOP.TO) but trimmed the price target on the stock to $55 from $60. The analyst believes Shopify Inc. (NYSE:SHOP.TO) may post Q3 revenue above consensus estimates on the back of stronger gross merchandise volume growth. While macro uncertainty and higher risk-free rates will potentially weigh on Shopify Inc. (NYSE:SHOP.TO)’s valuation through the end of this year, the company “is one of the most compelling long-term growth stories in our coverage universe,” noted the analyst.

According to Insider Monkey’s Q2 data, Shopify Inc. (NYSE:SHOP.TO) was part of 60 hedge fund portfolios, compared to 72 in the prior quarter. Cathie Wood’s ARK Investment Management held a prominent stake in the company, comprising 1.2 million shares worth $455.20 million. 

Here is what Rowan Street Capital specifically said about Shopify Inc. (NYSE:SHOP.TO) in its August 2022 investor letter:

“The following quote from the Q2 earnings call by Toby Lutke (CEO) best explains the transition that Shopify Inc. (NYSE:SHOP)’s business is going through:

‘Shopify has always been a company that makes the big strategic bets our merchants demand of us. This is how we win. During the pandemic, we made a bet that retail spend would disproportionately favor e-commerce at a much higher pace than it has. Our belief was that the channel mix, the share of dollars that travel through e-commerce rather than physical retail, would permanently leap ahead. As we built for the digital leap, we stepped our efforts and expanded the company accordingly. We couldn’t know for sure at the time, but we did know that if the prediction came true, we would have to rapidly scale the company to meet that future. Fast forward to now, as things have turned out differently. While the normalized rate of spend online, which is where most of our merchants’ orders occur, has reset certainly higher than where it was in 2019, the rate is lower than we had planned for. In short, we overshot our prediction. Recalibrating our investments and spending, we are making sure we do not sacrifice the components we feel are critical for Shopify to remain in an enviable position in a massive growing market as an enabler of multichannel commerce.’”

You can also take a look at 11 Best Furniture Stocks To Buy and 10 Best Silver Mining Stocks To Invest In.

Follow Insider Monkey on Twitter

Suggested articles:

• Top 10 Health Insurance Stocks To Buy
• 10 Best Young Stocks To Buy and Hold Forever
• 12 Best Income Stocks To Invest In

Disclosure: None. 10 Best TSX Stocks To Buy Now is originally published on Insider Monkey.