Brady Make America Great Again Hat
As someone who lives and breathes the Canadian way of life, I ofttimes get called on by InvestorPlace to write about Canadian stocks to buy.
Some obvious names that trade on the New York Stock Substitution or the Nasdaq come to mind. Many of them depend on America for much of their livelihood. It's why the latest U.Southward. election cycle has been mesmerizing television for Canadian business organization executives.
In November, CEOs across Canada and those operating from within the U.South. were definitely sweating the details. After all, when the U.Due south. sneezes, Canada catches a cold.
As professor Richard Leblanc notes, "There actually isn't an industry that's allowed from what happens s of the border . What goes on, goes right to the superlative very quickly." Leblanc teaches governance, law and ethics at York Academy in Toronto.
Well, Joe Biden won and Donald Trump lost. Canada will now get prepare to run across how the human relationship shifts — and information technology ever does afterward a change in presidents.
So, for this article, I'g recommending seven Canadian stocks that generate a significant amount of their revenue in the Us. Equally the headline reads, each one could be considered the feather in America's hat.
- Lululemon (NASDAQ: LULU )
- Shopify (NYSE: SHOP )
- BRP (NASDAQ: DOOO )
- Enbridge (NYSE: ENB )
- Toront0-Dominion (NYSE: TD )
- Thomson Reuters (NYSE: TRI )
- FirstService (NASDAQ: FSV )
Canadian Stocks to Buy: Lululemon (LULU)
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I call up when I first recommended this apparel make back in August of 2016. I called LULU stock a top 50 S&P 500 investment over the adjacent decade. The only trouble was it wasn't part of the alphabetize — and still isn't.
At the time, Lululemon's sales in the U.Southward. deemed for over 60% of its financial 2015 acquirement of $$2.1 billion (Page 61). In the company's fiscal year 2019, U.Due south. sales accounted for over 71% of its $4 billion in almanac revenue.
Despite an increase in the percent of sales generated in the U.S. over these iv fiscal years, the visitor too did an fantabulous job of growing sales in its home market place of Canada and overseas.
As big a deal as this pick of the Canadian stocks was four years ago, it's an even bigger deal today.
On Dec. 10, it reported Q3 2020 sales that grew 22% year-over-year (YOY), despite a serious downturn in walk-in traffic due to Covid-19. CNBC reports that Neil Saunders, the Retail Director at GlobalData, said, "While a V-shaped recovery may not exist materializing for most of wearing apparel retail, Lululemon has bounced back from the weak start to its yr with a stunning set of third-quarter numbers […] Our data also prove that Lululemon has picked up plenty of new shoppers, especially in womenswear."
And so, when information technology comes to retail, Lululemon is one of the best stocks to own — and information technology just happens to be run out of Vancouver.
Shopify (SHOP)
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Given the returns of tech stocks in 2020, Shopify's performance — a twelvemonth-to-engagement (YTD) full render of 195% through Dec. 18 — seems almost pedestrian.
The reality is, though, that SHOP stock is having a adept year and (barring some major change in consumer shopping habits) the company'south e-commerce platform will remain in demand for companies of all sizes.
As InvestorPlace's Faisal Humayun stated recently, Shopify is crushing information technology .
"From a financial perspective, the company reported cash and equivalents of $6.ane billion [as of the end of September]," Humayun wrote on Dec. 14. He added, "In improver, with improving operating leverage, I expect operating cash flows increase in the coming years. This will allow the company to continue aggressive investments in growth and research and development."
The last time I covered SHOP on a unmarried-stock basis was in April, when information technology traded around $525. At the fourth dimension, I wondered if the stock would be heading to $650 or dorsum to $350 , where it traded during the March correction.
I concluded that if you were holding Shopify stock for the long haul — say 2-iii years — buying in the $500s wasn't a bad call. Now, it has doubled from April prices to over $i,170 per share.
Heading into 2021, I don't know if SHOP will double over again. However, solid returns definitely appear to be in the cards for this ane of the Canadian stocks, given its business model's undeniable force.
BRP (DOOO)
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BRP stands for Bombardier Recreational Products, simply you probably better know its brands — Ski-Doo, Lynx, Bounding main-Doo, Tin can-Am, Alumacraft boats and more than. While the company'southward heritage is in snowmobiles, it has too grown to become a big seller of all-terrain vehicles (ATVs) and side-past-side vehicles (SSVs).
In the third quarter concluded Oct. 31, BRP had sales of over 1.67 billion CAD (over $1.31 billion), 1.9% college than in the aforementioned quarter a yr earlier. However, on the bottom line, it had operating profits of 284.3 million CAD (well-nigh $223 one thousand thousand), most 37% college YOY.
As a result of a more assisting sales mix in financial 2021, the visitor is expected to abound its normalized earnings per share (EPS) by virtually 37% this year, despite an overall 1.four% decline in sales. Consumers are paying summit dollar for its year-circular products (ATVs, SSVs) and that's showing up on the income statement.
In Nov 2018, I recommended investors buy Po laris (NYSE: PII ), BRP'south biggest rival . Right at present, information technology'south up marginally over the two-year period. At the same time, DOOO stock is upwardly 177% over the aforementioned menstruation.
As it continues to gain global market share, I wait BRP to keep delivering potent double-digit returns for shareholders in 2021, earning its place on this list of the best Canadian stocks.
Enbridge (ENB)
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In 2019, Enbridge generated thirty.1 billion CAD ($23.half-dozen billion) in the United states of america, accounting for roughly 60% of its overall revenues (Page 120). In the past ii financial years, ENB'south sales in Canada take grown by 10.4%. S of the border, even so, they grew by a more robust 14.4% over the aforementioned period. While that might not seem like a big deviation, when yous're talking most over l billion CAD in annual revenue, it's noticeable.
At present, most of the Canadian stocks on this list are growth-oriented stocks. But Enbridge — whose free energy infrastructure helps go along North America running — is a combination of value, growth and income.
On Dec. 8, the company declared a 3% increase in its quarterly dividend to 83.5 cents CAD. The annualized dividend charge per unit of three.34 CAD yields a very healthy vii.8%. Plus, with iii.95 billion CAD ($iii.1 billion) in free cash menstruum over the past 12 months and growing at a healthy clip, ENB stock has plenty of greenbacks to make the annual payments.
Its total render YTD is -16%. Equally long equally the oil and gas industry continues to sputter, Enbridge might experience the same upshot in 2021. However, with the visitor expected to begin construction on the Line 3 pipeline project in Minnesota in the yr alee, Enbridge's growth plans are starting to look up.
And then, get paid by waiting on Enbridge to inevitably grow its business south of the border.
Toronto-Dominion Bank (TD)
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It'southward non been a good year for most Canadian banks, although Toronto-Rule'due south virtually recent quarterly results propose the pandemic's wrath may be coming to an end. Recently, TD stock has come on in recent months, gaining over xviii% in the past 3 months alone.
The banking company reported its Q4 results on December. 3. On an adjusted basis, TD earned 2.97 billion CAD (over $2.32 billion) in net income, slightly higher than the ii.95 billion CAD ($2.31 billion) it made a year before. For the unabridged year, it earned ix.97 billion CAD (roughly $7.8 billion), a little more than than twenty% lower than the year earlier.
What'due south more, Toronto-Dominion's U.Southward. retail banking business accounted for roughly 30% of its overall cyberspace income during the fourth quarter, raking in 871 million CAD ($658 million). Unfortunately, it was 27% lower than a year earlier. However, its Canadian retail cyberbanking was iii% college YOY.
The near of import figure in the bank's Q4 written report, though, was the steep drop in its provision for credit losses, which fell to 971 million CAD ($760 million) from 2.nineteen billion CAD ($ane.72 billion) at the end of the third quarter ending on July 31 (Page 7).
Also, on a positive note, analysts expected TD to earn $1.27 during the quarter. Information technology shell that estimate by 33 cents.
Once the U.S. economy returns to normal, Toronto-Dominion'south U.S. retail business concern ought to make a bigger contribution to the banking concern's bottom line. And, permit's non forget that the bank too owns 13.v% of Charles Schwab (NYSE: SCHW ).
In the concurrently, savor its 4.3% dividend yield. Out of all of the Canadian stocks on the market, TD is definitely a solid pick.
Thomson Reuters (TRI)
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Next on my listing of some of the best Canadian stocks is TRI stock. In a challenging operating environment, Thomson Reuters reported splendid Q3 results on Nov. iii.
On the top line, sales grew by 2% during the quarter to $1.44 billion — and 3% if you exclude currency. On the bottom line, it earned 39 cents a share, 44% higher than a year earlier and 48% higher if you exclude currency.
In fiscal 2019, Thomson Reuters generated 79% of its $5.9 billion in revenue in the United States. So, fifty-fifty though TRI is controlled past Canada'south richest family unit — the Thomsons, who ain 66% of the company'south stock — much of the company's wealth has been earned in the U.S.
Recently, Thomson Reuters also completed a large-scale migration of its business information services to AWS, Amazon's (NASDAQ: AMZN ) deject-computing service. The company's digital transformation will enable it to get a more than agile business in the hereafter. Every bit role of the migration, information technology moved thousands of servers to AWS.
While I don't think you're going to hit a homerun owning TRI stock the aforementioned style yous will with Shopify, you can't go wrong with this proper noun if preservation of upper-case letter is important to you lot.
FirstService (FSV)
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Concluding on my list of Canadian stocks is FirstService, a leader in outsourced property services in North America. Information technology'south definitely the smallest of the seven stocks listed in this article. But what it lacks in company size, information technology makes up for in outsized shareholder returns. And so far in 2020, information technology'south having a neat year with a total return of over 41% YTD.
FSV is divided into two operating segments : FirstService Residential, which manages residential communities, and FirstService Brands, a provider of "essential property services" like painting, holding damage restoration, flooring, closets and domicile inspections.
In the trailing 12 months ended Sep. xxx, FSV had $2.67 billion in sales, 90% of which was generated in the United States. The rest was made in its home base of Canada. Employing approximately 24,000 people, it had trailing 12-months adjusted EBITDA of $268 one thousand thousand, roughly 10% of its top-line sales.
In 1995, the company had $37 1000000 in acquirement. Some 24 years later in 2019, acquirement was $2.41 billion. That makes for a compound annual growth rate of 19% (Page 5).
You lot can't get incorrect with businesses that make or save customers time and coin. FirstService does both. It's an excellent long-term purchase.
On the date of publication, Volition Ashworth did non accept (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments total-time since 2008. Publications where he's appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the examination of time. He lives in Halifax, Nova Scotia.
Source: https://investorplace.com/2020/12/7-canadian-stocks-that-are-the-feather-in-americas-hat/
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