10 Best TSX Stocks To Buy Right Now

Published on May 2, 2022 at 11:10 am by Usman Kabir in Hedge Funds, News

In this article, we discuss the 10 best TSX stocks to buy right now. If you want to read about some more TSX stocks, go directly to 5 Best TSX Stocks To Buy Right Now.

Investors in the United States often underestimate the potential of the Canadian stock market as a wealth building machine. For those doubting this assessment, a comparison between the economic health of both countries serves to illustrate this point. For example, official figures reveal that the Canadian economy expanded by 1.1% in February, the fastest pace in around twelve months, as business boomed in light of easing virus restrictions. In the US, the gross domestic product (GDP) declined at an annual rate of 1.4% in the first quarter.

Statistics Canada, the government agency that keeps track of the fiscal health of the country, has said that three quarters of the economic sectors it tracks saw output increase in February. The expansion of the economy in February was also the ninth-consecutive month of gain, topping predictions by 0.3%. In the US, a rising trade deficit continued to hamper economic gain, contributing to a 3.2% drop in growth. The personal consumption expenditures price index in the US rose by 5% during the first quarter, topping central bank expectations by over 3%.

Reopening Sectors Drive Canadian Growth

The growth of the Canadian economy is surprising given that the central bank recently raised the key interest rate target by half a percentage point for the first time in more than 20 years. As inflation surges, the bank has warned that more rate hikes are on the way. Claire Fan, a Canadian economic expert, has said that February figures and early estimates from March indicate that the Canadian economy grew at an annualized rate of about 5.5% in the first quarter, comparing favorably to the economic contraction in the US during the same period.

Some of the Canadian industries that are largely responsible for this growth include the accommodation and food services sector, transportation and warehousing, arts, entertainment and recreation sector, and the construction sector, with gains of around 15%, 3%, 8%, and 2% respectively in February. Overall, the services-producing industries and goods-producing industries also rallied by 0.9% and 1.5%. The Bank of Canada expects the economy to grow at 4.25% this year despite inflation and rate hikes.

Inflation Cools Positive Sentiment

The activity on the Toronto Stock Exchange does not seem to reflect this positive sentiment. On April 29, the main stock index in Canada posted a decline of over 5%, driven by disappointing earnings from firms that also trade on exchanges in the US. Inflation and soaring interest rate hikes also weighed on investor sentiment, driving down the prices of Canadian tech stocks that compete with giants like Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT) in the US.

Shailesh Kshatriya, the director of investment strategies at Russell Investments, told news agency Reuters that earnings season was not really helping the market. Per the director, equities in Canada were “not immune to what is happening across North America”. However, Kshatriya added that the resource exposure was “clearly making” the net impact a little bit more palatable for domestic investors. He also noted that consumers in Canada were “very sensitive” to interest rate hikes at this point.

In the past few days, all major sectors of the Toronto Stock Exchange have posted declines. Industrials are down by 2.8% while the tech sector has lost 2.5%. The TSX has fallen more than 2.2% so far this year. However, this compares positively to the returns of the S&P 500 Index in the US which has posted a 13% decline in 2022. In Canada, the stock market has avoided a major drop so far with the help of gains in the energy and materials sectors which are up by 47% and 14%. Both of these are heavily weighted in the market.

Photo by Sandro Schuh on Unsplash

Our Methodology

The companies that trade on the Toronto Stock Exchange and are best positioned to gain from the present macroeconomic environment were selected for the list. The business fundamentals of these firms and the latest updates related to them are also discussed to provide some additional context.

Best TSX Stocks To Buy Right Now

10. TELUS Corporation (TSX:T.TO)

TELUS Corporation (TSX:T.TO) is a communications and information technology firm. The company has a reliable dividend payouts structure, consistently providing shareholders with payments for more than two decades. Over the past two years, these payments have been growing as well. On February 14, the company declared a quarterly dividend of C$0.3274 per share, in line with previous. The forward yield was an impressive 4.16%. TELUS Corporation (TSX:T.TO) grew quarterly revenue by 20% year-on-year in the fourth quarter of 2021.

Late last year, TELUS Corporation (TSX:T.TO) had sold the financial solutions business it owned to software firm Dye & Durham for $500 million. The former is still providing operational transition services to the latter, an agreement expected to last for at least two years.

On February 14, Desjardins analyst Jerome Dubreuil maintained a Buy rating on the TELUS Corporation (TSX:T.TO) stock and raised the price target to C$34.50 from C$33. JPMorgan and National Bank are also bullish on the shares.

Just like Amazon.com, Inc. (NASDAQ:AMZN) Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), TELUS Corporation (TSX:T.TO) is one of the stocks on the radar of elite investors.

9. TFI International Inc. (TSX:TFII.TO)

TFI International Inc. (TSX:TFII.TO) provides transportation and logistics services. On April 28, the firm posted earnings for the first quarter of 2022, reporting earnings per share of $1.68, beating estimates by $0.38. The revenue over the period was $2.1 billion, up over 90% year-on-year and smashing expectations by $170 million. Over the past two decades, TFI International Inc. (TSX:TFII.TO) has been involved in more than 180 acquisitions that have generated a total cumulative return on investment of 4,800%.

TFI International Inc. (TSX:TFII.TO) has a diverse and dividend customer base. No single customer contributes more than 5% to the overall revenue of the firm. This is likely to serve the firm in good stead as inflation results in a slowdown in the trucking business.

8. Parkland Corporation (TSX:PKI.TO)

Parkland Corporation (TSX:PKI.TO) owns and operates food and convenience stores. It has an impressive dividend history stretching back nineteen years. On March 11, the company declared a quarterly dividend of C$0.1038 per share, an increase of more than 5% from the previous dividend of C$0.1029. The forward yield was close to 5%. In earnings for the fourth quarter of 2021, posted in early March, Parkland Corporation (TSX:PKI.TO) reported a revenue of $6.2 billion, up 14% year-on-year and beating estimates by $1.9 billion.

Bob Espey, the CEO of Parkland Corporation (TSX:PKI.TO), said during the earnings call that the acquisitions that the company had made since 2020 would contribute more than $200 million to adjusted earnings in 2022. By 2024, this figure will climb to $280 million.

On March 7, Scotiabank analyst Ben Isaacson kept a Sector Perform rating on Parkland Corporation (TSX:PKI.TO) stock and raised the price target to C$44 from C$41. Other investment advisors like TD Securities and Goldman Sachs are also bullish on the shares.

7. Goeasy Ltd. (TSX:GSY.TO)

Goeasy Ltd. (TSX:GSY.TO) provides leasing and lending services. Over the past seventeen years, the company has consistently paid a dividend to shareholders. These payouts have grown in the past two years consecutively. On February 16, the company declared a quarterly dividend of C$0.91 per share, an increase of close to 38% from the previous dividend of C$0.66. The forward yield was 2.29%. Goeasy Ltd. (TSX:GSY.TO) grew quarterly revenue by more than 35% year-on-year in the fourth quarter of 2021.

Goeasy Ltd. (TSX:GSY.TO) expects to grow total revenue for 2022 to around $1 billion. Commenting on the earnings, Jason Mullins, the CEO of the firm, affirmed that the company was working on a plan to scale the consumer loan portfolio by 75% in the next two years.

6. Algonquin Power & Utilities Corp. (TSX:AQN.TO)

Algonquin Power & Utilities Corp. (TSX:AQN.TO) owns and operates utility assets. The hydroelectric, wind, solar, and thermal power generation facilities of the firm have a capacity of around 2.3 gigawatt. The firm serves 307,000 electric connections, 373,000 natural gas connections, and 413,000 water distribution and wastewater collection utility systems. Algonquin Power & Utilities Corp. (TSX:AQN.TO) has been paying a growing dividend to shareholders for the past twelve years. The forward dividend yield is over 4%.

Algonquin Power & Utilities Corp. (TSX:AQN.TO) posted earnings for the fourth quarter of 2021 on March 4, reporting earnings per share of $0.21, in line with market estimates. The revenue over the period was $594 million, up 20% year-on-year and beating estimates by $73 million.

In addition to Amazon.com, Inc. (NASDAQ:AMZN) Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), Algonquin Power & Utilities Corp. (TSX:AQN.TO) is one of the stocks that hedge funds are monitoring.

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