Make America Great Again Russian Hat
Every bit someone who lives and breathes the Canadian way of life, I frequently go called on by InvestorPlace to write nigh 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.S. election cycle has been mesmerizing goggle box for Canadian business executives.
In Nov, CEOs across Canada and those operating from within the U.S. were definitely sweating the details. After all, when the U.Due south. sneezes, Canada catches a cold.
As professor Richard Leblanc notes, "There really isn't an manufacture that'due south allowed from what happens south of the border . What goes on, goes right to the top very apace." Leblanc teaches governance, law and ethics at York University in Toronto.
Well, Joe Biden won and Donald Trump lost. Canada volition now become set to run into how the human relationship shifts — and it always does afterward a modify in presidents.
So, for this article, I'm recommending seven Canadian stocks that generate a significant amount of their acquirement in the United States. As the headline reads, each ane could be considered the plume in America'south lid.
- 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 remember when I starting time recommended this apparel brand back in August of 2016. I called LULU stock a top 50 Due south&P 500 investment over the next decade. The but problem was it wasn't office of the alphabetize — and however isn't.
At the time, Lululemon's sales in the U.S. accounted for over 60% of its fiscal 2015 revenue of $$2.1 billion (Page 61). In the visitor's fiscal year 2019, U.South. sales deemed for over 71% of its $4 billion in almanac revenue.
Despite an increase in the percentage of sales generated in the U.S. over these four financial years, the company besides did an excellent chore of growing sales in its home market of Canada and overseas.
Every bit big a deal as this pick of the Canadian stocks was iv years ago, it'south 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 Managing Managing director at GlobalData, said, "While a V-shaped recovery may not be materializing for well-nigh of apparel retail, Lululemon has bounced back from the weak beginning to its yr with a stunning set of third-quarter numbers […] Our information as well prove that Lululemon has picked up plenty of new shoppers, peculiarly in womenswear."
And then, when it comes to retail, Lululemon is i of the best stocks to own — and it just happens to exist run out of Vancouver.
Shopify (Shop)
Source: Burdun Iliya / Shutterstock.com
Given the returns of tech stocks in 2020, Shopify's performance — a year-to-date (YTD) full return of 195% through December. xviii — seems about pedestrian.
The reality is, though, that Shop stock is having a good year and (barring some major change in consumer shopping habits) the company'due south due east-commerce platform will remain in demand for companies of all sizes.
As InvestorPlace's Faisal Humayun stated recently, Shopify is crushing it .
"From a financial perspective, the visitor reported cash and equivalents of $6.1 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 increment in the coming years. This volition allow the company to go on aggressive investments in growth and research and development."
The last fourth dimension I covered SHOP on a unmarried-stock basis was in April, when it traded around $525. At the time, I wondered if the stock would be heading to $650 or back to $350 , where information technology traded during the March correction.
I concluded that if you were holding Shopify stock for the long booty — say ii-iii years — ownership in the $500s wasn't a bad phone call. Now, information technology has doubled from Apr prices to over $1,170 per share.
Heading into 2021, I don't know if SHOP will double again. Nevertheless, 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, just y'all probably amend know its brands — Ski-Doo, Lynx, Sea-Doo, Can-Am, Alumacraft boats and more. While the visitor's heritage is in snowmobiles, it has as well grown to become a large seller of all-terrain vehicles (ATVs) and side-by-side vehicles (SSVs).
In the 3rd quarter ended October. 31, BRP had sales of over 1.67 billion CAD (over $1.31 billion), 1.9% higher than in the same quarter a year earlier. However, on the bottom line, it had operating profits of 284.three million CAD (about $223 million), nearly 37% higher YOY.
Equally a result of a more profitable sales mix in fiscal 2021, the company is expected to grow its normalized earnings per share (EPS) by about 37% this year, despite an overall 1.iv% turn down in sales. Consumers are paying top dollar for its year-round products (ATVs, SSVs) and that's showing upwardly on the income statement.
In November 2018, I recommended investors buy Po laris (NYSE: PII ), BRP's biggest rival . Right now, it's up marginally over the 2-year period. At the aforementioned time, DOOO stock is up 177% over the same menstruum.
As it continues to proceeds global marketplace share, I expect BRP to keep delivering strong double-digit returns for shareholders in 2021, earning its place on this list of the best Canadian stocks.
Enbridge (ENB)
Source: Shutterstock
In 2019, Enbridge generated 30.1 billion CAD ($23.six billion) in the United States, accounting for roughly 60% of its overall revenues (Page 120). In the by two fiscal years, ENB's sales in Canada accept grown by 10.4%. South of the edge, even so, they grew by a more robust xiv.iv% over the same period. While that might not seem similar a large divergence, when you're talking about over 50 billion CAD in annual acquirement, it'southward noticeable.
Now, most of the Canadian stocks on this list are growth-oriented stocks. But Enbridge — whose energy infrastructure helps keep N America running — is a combination of value, growth and income.
On Dec. 8, the company declared a 3% increment in its quarterly dividend to 83.5 cents CAD. The annualized dividend rate of 3.34 CAD yields a very healthy vii.8%. Plus, with three.95 billion CAD ($three.ane billion) in free cash flow over the past 12 months and growing at a healthy clip, ENB stock has plenty of cash to make the annual payments.
Its full return YTD is -16%. As long as the oil and gas industry continues to sputter, Enbridge might feel the same result in 2021. However, with the company expected to begin construction on the Line three pipeline projection in Minnesota in the twelvemonth alee, Enbridge's growth plans are starting to look up.
So, get paid by waiting on Enbridge to inevitably grow its business due south of the border.
Toronto-Dominion Banking concern (TD)
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It's not been a good twelvemonth for about Canadian banks, although Toronto-Rule's most recent quarterly results suggest the pandemic'southward wrath may be coming to an end. Recently, TD stock has come on in contempo months, gaining over xviii% in the past iii months lonely.
The bank reported its Q4 results on Dec. iii. On an adjusted basis, TD earned 2.97 billion CAD (over $2.32 billion) in net income, slightly higher than the 2.95 billion CAD ($2.31 billion) it made a twelvemonth before. For the entire year, it earned 9.97 billion CAD (roughly $seven.8 billion), a little more than 20% lower than the year before.
What's more, Toronto-Rule's U.S. retail banking business organisation accounted for roughly 30% of its overall net income during the quaternary quarter, raking in 871 million CAD ($658 meg). Unfortunately, it was 27% lower than a year earlier. Nonetheless, its Canadian retail banking was iii% college YOY.
The virtually important figure in the bank'due south Q4 report, though, was the steep drib in its provision for credit losses, which savage to 971 one thousand thousand CAD ($760 million) from ii.19 billion CAD ($1.72 billion) at the terminate 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. It vanquish that estimate by 33 cents.
In one case the U.Southward. economy returns to normal, Toronto-Dominion's U.S. retail business ought to make a bigger contribution to the depository financial institution's bottom line. And, let's not forget that the bank too owns 13.5% of Charles Schwab (NYSE: SCHW ).
In the meantime, enjoy its 4.3% dividend yield. Out of all of the Canadian stocks on the marketplace, TD is definitely a solid pick.
Thomson Reuters (TRI)
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Adjacent on my list of some of the best Canadian stocks is TRI stock. In a challenging operating environment, Thomson Reuters reported excellent Q3 results on Nov. 3.
On the top line, sales grew past 2% during the quarter to $1.44 billion — and 3% if you lot exclude currency. On the bottom line, it earned 39 cents a share, 44% higher than a year earlier and 48% college if you exclude currency.
In financial 2019, Thomson Reuters generated 79% of its $5.9 billion in revenue in the United States. And so, even though TRI is controlled by Canada'due south richest family unit — the Thomsons, who own 66% of the visitor'due 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 organization information services to AWS, Amazon's (NASDAQ: AMZN ) deject-computing service. The company's digital transformation will enable it to become a more agile business organisation in the future. As part of the migration, information technology moved thousands of servers to AWS.
While I don't think you're going to striking a homerun owning TRI stock the same way you volition with Shopify, you can't become wrong with this name if preservation of capital is important to yous.
FirstService (FSV)
Source: Shutterstock
Final on my list of Canadian stocks is FirstService, a leader in outsourced property services in N America. It'due south definitely the smallest of the seven stocks listed in this article. Merely what it lacks in company size, it makes up for in outsized shareholder returns. So far in 2020, it's having a not bad twelvemonth with a total render of over 41% YTD.
FSV is divided into two operating segments : FirstService Residential, which manages residential communities, and FirstService Brands, a provider of "essential belongings services" like painting, belongings damage restoration, flooring, closets and dwelling 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 fabricated in its home base of operations of Canada. Employing approximately 24,000 people, information technology had trailing 12-months adjusted EBITDA of $268 million, roughly 10% of its top-line sales.
In 1995, the visitor had $37 meg in revenue. Some 24 years afterwards in 2019, revenue was $2.41 billion. That makes for a compound annual growth rate of 19% (Page 5).
You can't go incorrect with businesses that make or save customers time and money. FirstService does both. It's an excellent long-term buy.
On the date of publication, Volition Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-fourth dimension since 2008. Publications where he'south 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 test of fourth dimension. 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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