As 2021 approaches, there are plenty of Canadian stocks you can build wealth with. Unlike the US indices, the TSX has not hit stratospheric valuations, meaning there are plenty of affordable dividend-paying stocks and other blue chips. Of course, high-tech stocks – like those of the NASDAQ – have produced stellar gains. But you never know how long it will last. In the meantime, there are plenty of “mainstream industry” stocks that look like bargains right now. In this article, I’ll go through three of them to help you find stocks worth buying in 2021.
Canadian tire (TSX: CTC.A) is a stock that had a wild ride in 2021. In the first quarter, it was caught off guard by the COVID-19 pandemic. The lockdowns have resulted in lower gasoline sales and store closings. As a result, CTC.A had – $ 0.22 of EPS in the first quarter. However, the business started to rebound after this. In the second quarter, it saw its e-commerce sales increase by 400%. In the third quarter, the company showed positive year-over-year growth in both revenue (up 18.9%) and profits (up 43%). These factors show that Canadian Tire has plenty of room to grow in the post-COVID era. Still, its stocks are relatively cheap, trading at just 17 times the trailing profits.
Toronto-Dominion Bank (TSX: TD) (NYSE: TD) is one of the best performing Canadian banks of 2020. In its most recent quarter, it recorded positive year-over-year growth in GAAP earnings (80% ) and adjusted profits (1%). Much of its fourth quarter success can be attributed to its sale of TD Ameritrade to Charles Schwab. This resulted in a huge salary of $ 2 billion. As a result of the sale, TD now owns 13.5% of Charles Schwab itself, making it a partner of the world’s largest brokerage firm. This should lead to steady and steady growth in profits from now on.
Algonquin Power & Utilities
Algonquin Power & Utilities (TSX: AQN) (NYSE: AQN) is a Canadian utility company that invests heavily in renewable energy. It operates mainly in the United States, where it offers renewable energy through its subsidiary Liberty Utilities. AQN stock has been a strong performance over the years, increasing 320% in a decade. These stock price gains were driven by equally impressive trading performance. As a regulated utility, AQN has experienced steady and stable profit growth over the years. In its last quarter, sales increased by 3%, adjusted EBITDA by 6% and adjusted net income by 27%.
These are all pretty solid indicators. Algonquin’s business has been affected by the COVID-19 situation, but much less than other businesses. Utilities are an essential service that people continue to pay for even when times are tough. Algonquin and other utilities took advantage of this fact in 2020, resulting in solid earnings and a decent stock price performance. Today, AQN stock is quite expensive for a utility, trading at 19 times earnings. Nonetheless, its 3.87% dividend yield could make it an attractive buy for an income-oriented portfolio.
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Andrew Button, an idiotic contributor, owns shares of TORONTO-DOMINION BANK. The Motley Fool recommends Charles Schwab.