In this article, we discuss the 12 best Canadian stocks to buy and hold.
To cap off a turbulent year, the Bank of Canada hiked its overnight rate by 50 basis points to 4.25% on December 7, 2022, in line with market expectations. In an effort to subdue inflation, Canada’s central bank has hiked its rate seven times this year. The Canadian economy is feeling the repercussions of increasing borrowing costs, which are having an impact on housing prices and mortgages. Next year may see the beginning of an impending economic downturn or even a recession.
According to a revised prediction from analysts at the Royal Bank of Canada (RBC), the Canadian economy will experience a recession in the first quarter of 2023. The bank initially stated in July that it anticipated the economy to experience back-to-back quarters of negative growth in mid-2023. Households are already feeling the effects of economic pressure. The average person’s purchasing power is predicted to decline by roughly $3,000 in 2023, according to RBC economists Nathan Janzen and Claire Fan.
Additionally, a Bloomberg survey of 26 economists conducted in November 2022 predicted that the Gross Domestic Product would experience consecutive quarterly decline in the beginning of 2023, a situation classified as a technical recession. The Canadian economy is expected to contract by an annualized 0.5% in the first quarter and 0.6% in the second quarter next year. However, most economists continue to predict that Canada will resume growth in the second half of 2023, per the survey.
The economy is anticipated to expand by an average of 0.6% in 2023 and 1.7% in 2024. While American companies like PepsiCo, Inc. (NASDAQ:PEP), Colgate-Palmolive Company (NYSE:CL), and Amazon.com, Inc. (NASDAQ:AMZN) continue to attract investors’ attention, it is a good idea to jump into some Canadian equities for broader exposure. Several prestigious Canadian companies are trading on exchanges in the United States. As such, we have compiled a list of the best Canadian stocks to buy and hold.
Our Methodology:
The companies that are based in Canada were selected for this list. We evaluated these companies through their overall financial health. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2022 was used to identify the number of hedge funds that hold stakes in each company. We preferred stocks that are expected to gain value in the coming months and years and those that offer dividends.
Best Canadian Stocks to Buy and Hold
12. Bank of Montreal (NYSE:BMO)
Number of Hedge Fund Holders: 9
Bank of Montreal, a multinational investment bank based in Canada, provides financial services like travel, mortgages, credit cards, loans, investments, and financial planning. According to a December announcement, Extend, a virtual card and spend management platform, and Bank of Montreal have upgraded the payment capabilities of the bank’s corporate cards. Clients of BMO Commercial Bank in North America may now create, transmit, and manage virtual cards using Extend’s desktop and mobile applications.
On December 1, Bank of Montreal posted earnings for the fiscal fourth quarter of 2022. The company reported an EPS of C$3.04 and generated a revenue of C$10.57 billion, up 60.9% year over year and ahead of Wall Street estimates by $3.65 billion.
Investment advisory TD Securities on December 2 maintained a Buy rating on Bank of Montreal stock and raised the price target on the shares to C$150 from C$145. Analyst Mario Mendonca issued the ratings update.
At the close of the third quarter of 2022, 9 hedge funds held stakes in Bank of Montreal. The total value of these stakes amounted to $43 million.
In addition to PepsiCo, Inc., Colgate-Palmolive Company, and Amazon.com, Inc., Bank of Montreal is one of the best stocks to consider for a balanced portfolio.
11. BCE Inc. (NYSE:BCE)
Number of Hedge Fund Holders: 10
BCE Inc., a communications firm with its headquarters in Canada, is one of the finest Canadian stocks to buy and hold. The firm provides Internet, television, media, Bell broadband wireless, and business communications services. Bell Wireless, Bell Wireline, and Bell Media are the company’s three operating segments.
Wall Street analysts are bullish on BCE Inc.. This November, RBC Capital analyst Drew McReynolds updated his price target on BCE Inc. stock to C$64 from C$63 and reiterated a Sector Perform rating on the shares. On November 4, Scotiabank analyst Maher Yaghi raised his price target on BCE Inc. to C$66.75 from C$65.50 and maintained an Outperform rating on the shares.
10 hedge funds in Insider Monkey’s database had BCE Inc. in a bullish position at the end of the third quarter of 2022. These hedge funds held shares in the firm worth about $82.1 million. Renaissance Technologies, with a position worth $18.9 million, stood as the most significant shareholder of BCE Inc..
10. Royal Bank of Canada (NYSE:RY)
Number of Hedge Fund Holders: 14
Royal Bank of Canada, a diversified financial service company, is one of the best Canadian stocks to buy and hold. Personal & Commercial Banking, Wealth Management, Insurance, Investor & Treasury, and Capital Markets are the company’s five operating segments. Analysts are bullish on the firm’s long-term prospects, with investment advisories like Desjardins, Canaccord, and Keefe Bruyette raising their price targets on the stock this December.
On November 30, Royal Bank of Canada declared a 3.1% hike in its quarterly dividend to C$1.32 per share. The stock’s dividend yield on December 7 came in at 4.02%.
Royal Bank of Canada was in 14 hedge fund portfolios at the end of the third quarter of 2022, compared to 12 in the previous quarter.
9. The Bank of Nova Scotia (NYSE:BNS)
Number of Hedge Fund Holders: 15
The Bank of Nova Scotia, headquartered in Toronto, Ontario, is a Canadian multinational banking and financial services company. The company beat market expectations on earnings per share in the fourth fiscal quarter and is placed among the best Canadian stocks to buy and hold.
Darko Mihelic, an analyst at RBC Capital, increased his price target on The Bank of Nova Scotia from $83 to $86 on November 30 while maintaining a ‘Sector Perform’ recommendation on the stock.
The company has been paying regular dividends to shareholders since 1833. As of December 7, The Bank of Nova Scotia has a quarterly dividend of C$1.03 per share with a dividend yield of 6.06%.
When looking at the institutional investors followed by Insider Monkey at the end of Q3, Renaissance Technologies, managed by Jim Simons, holds the biggest position in The Bank of Nova Scotia. Renaissance Technologies has over a $90.5 million position in the stock, comprising 0.12% of its 13F portfolio.
8. TC Energy Corporation (NYSE:TRP)
Number of Hedge Fund Holders: 17
TC Energy Corporation is Calgary-based energy company. The company builds and maintains energy infrastructure, such as gas storage facilities, liquid pipelines, power plants, and natural gas pipelines, in Mexico, the United States, and Canada.
On November 30, TC Energy Corporation received conditional approval from the Canadian government for the expansion of its NOVA Gas Transmission LTD (NGTL) pipeline system in Alberta .This will enable western Canadian natural gas have better market access. The existing 25,000-kilometer NGTL system, which transports gas across Canada and to U.S. markets, will receive an additional 40 kilometers of new natural gas pipeline as part of the West Path Delivery 2023 (WP2023) project.
TC Energy Corporation currently pays a quarterly dividend of C$0.90 per share, with a dividend yield of 6.20%, as of December 7.
Arrowstreet Capital owned roughly $36.9 million worth of stakes in TC Energy Corporation, becoming the company’s leading stakeholder in Q3 2022. Overall, 17 hedge funds tracked by Insider Monkey owned stakes in the company in Q3, growing from 14 in the previous quarter. These stakes hold a combined value of over $165.7 million.
7. The Toronto-Dominion Bank (NYSE:TD)
Number of Hedge Fund Holders: 22
The Toronto-Dominion Bank is a global provider of banking and financial services with its headquarters in Toronto. Given its scale, the company has higher margins than many of its competitors and is one of the top Canadian stocks to buy and hold. On November 30, The Toronto-Dominion Bank announced that it has made a $5 million investment in Citizens Trust Bank in Atlanta. Due to this investment, minority-owned businesses will have more access to capital.
On December 2, Credit Suisse analyst Mike Rizvanovic updated his price target on The Toronto-Dominion Bank to C$98 from C$96 and maintained a Neutral rating on the shares.
The Toronto-Dominion Bank was a popular buy among hedge funds in Q3 2022, as 22 funds owned stakes in the company, up from 19 in the previous quarter. These stakes are collectively valued at over $198.5 million.
6. Enbridge Inc. (NYSE:ENB)
Number of Hedge Fund Holders: 24
Enbridge Inc. is a Canada-based energy company. The company owns and manages pipelines that deliver crude oil, natural gas, and natural gas liquids all over Canada and the United States. On November 30, Enbridge Inc. declared a 3.2% hike in its quarterly dividend to C$0.89 per share. The stock’s dividend yield on December 7 came in at 6.66%.
On November 4, Enbridge Inc. posted earnings for the third quarter of 2022, reporting an EPS of C$0.67, beating market estimates by $0.03. The revenue over the period was C$11.57 billion, up 0.9% compared to the revenue over the same period last year.
By the end of the third quarter, Enbridge Inc. was part of 24 hedge fund portfolios. The consolidated stakes these funds had in the company were worth $2.3 billion, down from $2.4 billion the prior quarter. GQG Partners is the most significant stakeholder of Enbridge Inc., with a $2.1 billion position in the company.
In addition to safe investments like PepsiCo, Inc., Colgate-Palmolive Company, and Amazon.com, Inc., elite hedge funds are piling into Enbridge Inc..
5. Brookfield Asset Management Inc. (NYSE:BAM)
Number of Hedge Fund Holders: 39
Brookfield Asset Management Inc. is a Canadian investment management company. In November, Brookfield Asset Management Inc. announced that it has purchased NIKE, Inc. (NYSE:NKE) supplier Trimco Group, a Hong Kong-based manufacturer of garment labels, in a deal worth up to $900 million.
In the third fiscal quarter, Brookfield Asset Management Inc. reported revenue of $23.4 billion, up 21.7% compared to the revenue over the same period last year.
The number of hedge funds tracked by Insider Monkey owning stakes in Brookfield Asset Management Inc. grew to 39 in Q3 2022, from 34 in the previous quarter. The collective value of these stakes is nearly $2 billion. It is one of the top Canadian stocks to buy and hold according to elite hedge funds.
4. Canadian Pacific Railway Limited (NYSE:CP)
Number of Hedge Fund Holders: 41
Canadian Pacific Railway Limited is a transportation firm based in Canada. It offers rail and intermodal transportation services over a network of approximately 13,000 miles. On November 28, Deutsche Bank analyst Amit Mehrotra upgraded Canadian Pacific Railway Limited stock to Buy from Hold with a $98 price target. The analyst is confident on the outlook for transportation equities in 2023.
Given its scale, the company has shown strong profits. In the third fiscal quarter, Canadian Pacific Railway Limited reported an EPS of C$1.01. Its revenue for the quarter came in at C$2.31 billion, up 19.1% year over year and ahead of Wall Street estimates by C$40 million.
Canadian Pacific Railway Limited was a part of 41 hedge fund portfolios in Q3 2022, as per Insider Monkey’s data. The stakes owned by these hedge funds have a total value of over $7.1 billion. TCI Fund Management was the company’s leading stakeholder in Q3.
3. Canadian National Railway Company (NYSE:CNI)
Number of Hedge Fund Holders: 42
Canadian National Railway Company is the longest railway system in North America. It provides rail, intermodal, trucking, business development, and supply chain services. Canadian National Railway Company reported another solid quarterly performance in September 2022. The company reported an EPS of C$2.13 and generated a revenue of C$4.51 billion, up 25.6% year over year and ahead of Wall Street estimates by C$190 million. Free cash flow for the first nine months of 2022 was roughly C$3 billion, up C$2.03 billion for the same period last year.
Ken Hoexter, an analyst at BofA, maintained a Buy recommendation on Canadian National Railway Company stock on November 29 after the company named Edmond Harris as its Executive Vice-President and Chief Operating Officer. He also increased his price target from $131 to $140.
As of December 2, 2022, Bill & Melinda Gates Foundation Trust is the largest shareholder in Canadian National Railway Company in our database and holds a stake worth more than $5.9 billion.
2. Suncor Energy Inc. (NYSE:SU)
Number of Hedge Fund Holders: 45
Suncor Energy Inc., based in Calgary, Alberta, is an integrated energy firm. Suncor Energy Inc. recently reaffirmed its FY22 production guidance and is one of the best Canadian stocks to buy and hold on our list.
Given its financial stability and expansion prospects, the company has the potential to grow earnings in the long term. On November 16, Suncor Energy Inc. declared a 10% hike in its quarterly dividend to C$0.52 per share. The company’s dividend yield on December 7 came in at 5.06%.
According to the third quarter database of Insider Monkey, 45 hedge funds were bullish on Suncor Energy Inc., with combined stakes worth about $2 billion.
1. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 62
Shopify Inc., with more than 1,700,000 businesses in approximately 175 countries, is a multinational e-commerce company. With the use of the company’s software, retailers may create, manage, and market their goods through a variety of channels, such as social media, physical retail locations, marketplaces, web and mobile storefronts, and physical retail locations. It is headquartered in Ottawa, Ontario. On October 27, the company posted earnings for the third quarter of 2022. The revenue over the period was $1.37 billion, up 22.3% compared to the revenue over the same period last year.
On November 29, the e-commerce platform announced sales of $7.5 billion from independent businesses worldwide over a record-breaking Black Friday-Cyber Monday weekend, up 19% from last year. This year, more than 52 million customers worldwide made purchases from brands powered by Shopify Inc., an increase of 18% from the previous year. It is one of the premier Canadian stocks to buy and hold.
At the close of the third quarter of 2022, 62 hedge funds held stakes in Shopify Inc.. The total value of these stakes amounted to $2.4 billion. As of December 5, ARK Investment Management is the largest investor in Shopify Inc. and has a position worth $391.5 million.
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Disclosure. None. 12 Best Canadian Stocks to Buy and Hold is originally published on Insider Monkey.
