3 Top Canadian Stocks With Healthy Growth Prospects
Written by Rajiv Nanjapla at The Motley Fool Canada
The S&P/TSX Composite Index has rebounded strongly from its April lows, rising 18.2%. Easing trade tensions and favourable commentary from the Organization for Economic Co-operation and Development (OECD) on the Canadian economy have improved investors' sentiments, driving the equity markets higher. Amid rising investor confidence, I am bullish on the following three stocks, which offer healthier growth prospects.
Dollarama (TSX:DOL) is a discount retailer operating 1,616 stores across Canada, with 85% of Canadians having at least one store within a 10-kilometre vicinity. The company's superior direct-sourcing model, purchasing capabilities, and efficient logistics system have helped reduce its expenses, enabling it to offer a wide array of products to its customers at competitive prices. Therefore, the Montreal-based retailer enjoys healthy same-store sales even in challenging environments. Supported by its healthy and reliable financials, the company has delivered returns of approximately 4,580% over the last 15 years, at an annualized rate of 29.2%.
Moreover, Dollarama expects to increase its store network to 2,200 by the end of fiscal 2034. Considering its capital-efficient model, quick sales ramp-up, and lower store network maintenance capex requirements, these expansions could boost both its top and bottom lines. The retailer also has solid exposure to the Latin American market, with a 60.1% stake in Dollarcity, which operates 632 discount stores across the region. Meanwhile, Dollarcity continues to expand its store network, aiming to reach 1,050 by the end of fiscal 2032. Dollarama can also increase its stake to 70% by exercising its option by 2027.
Furthermore, Dollarama is venturing into the Australian retail market through the acquisition of the Reject Shop. The company is working on acquiring the Australian discount retailer for $233 million and expects to complete the deal in the second half of this year. Considering these growth prospects, I am bullish on Dollarama.
Second on my list would be Shopify (TSX:SHOP), which had reported a healthy first-quarter performance earlier this month. Its GMV (gross merchandise value) grew 23% to $74.8 billion, driven by the expansion of its customer base and same-store sales growth among existing merchants. Also, its topline grew 26.8% amid strong performance from subscription and merchant solutions. Despite the topline growth, the company incurred a net loss of $682 million, mainly due to a $900 million decline in its equity investments. Removing these one-time expenses, its adjusted EPS (earnings per share) stood at $0.25, a 25% increase from the previous year's quarter.
Meanwhile, more small and medium-sized businesses are adopting an omnichannel selling model, thereby driving demand for Shopify's products and services. The company is developing innovative and artificial intelligence (AI)-powered products, venturing into new markets, and growing the penetration of its Shopify Payments, which could support its topline growth. The company is also utilizing AI to enhance its operational capabilities and improve operational efficiency. Considering all these factors, I believe the uptrend in Shopify's financials will continue, which will support its stock price growth.
My final pick would be Celestica (TSX:CLS), which has witnessed solid buying over the last weeks, rising 98% from its previous month's lows. The company's impressive first-quarter performance and improving investors' sentiments have driven its stock price. In the recently reported first-quarter earnings, its revenue and adjusted EPS grew 20% and 44.6%, respectively.
Meanwhile, the growing use of AI has increased AI-related investments, thereby driving demand for Celstica's storage and networking products. Additionally, the company is focusing on product innovation to launch new products that meet the growing needs of its customers and strengthen its market position. Despite the recent increase in its stock price, the Toronto-based company still trades at a reasonable NTM (next 12 months) price-to-sales multiple of 1.2, making it an excellent buy.
The post 3 Top Canadian Stocks With Healthy Growth Prospects appeared first on The Motley Fool Canada.
Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $50 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.
Claim your FREE 5-stock report now!
More reading
Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS]
Market Volatility Toolkit
Best Canadian Stocks to Buy in 2025
Beginner Investors: 4 Top Canadian Stocks to Buy for 2025
5 Years From Now, You'll Probably Wish You Grabbed These Stocks
Subscribe to Motley Fool Canada on YouTube
Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool has a disclosure policy.
2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Bloomberg
16 minutes ago
- Bloomberg
Is Elon Musk's Political Capital Spent?
Donald Trump's right-hand man is telling everyone he wants to get back to business. On this week's episode of Elon, Inc., we discuss what may be behind it. Listen and subscribe to Elon, Inc. on Apple, Spotify, iHeart and the Bloomberg Terminal.
Forbes
16 minutes ago
- Forbes
Trump's War On The Media Explained: White House Asks Congress To Cut $1.1 Billion From Corporation For Public Broadcasting
The White House asked Congress Tuesday to claw back $1.1 billion in funding for the Corporation for Public Broadcasting, as NPR and PBS—which receive federal funding via the CPB—have already sued to block Trump from a previous attempt to prevent the media organizations from receiving the public dollars. The White House asked Congress to rescind $1.1 billion in funding for the Corporation for Public Broadcasting, part of a larger $9.4 billion 'rescissions' request to Congress that also asks lawmakers to retract $8.3 billion in funding for the U.S. Agency for International Development. The move is among a series by Trump and his administration targeting media he views unfavorably. Meanwhile, Trump and his companies have filed lawsuits against his media foes, his administration has elevated partisan right-wing voices in the White House press corps and sought to effectively shut down federally funded media outlets, including the international broadcaster Voice of America, among other tactics. Trump's new FCC Commissioner Brendan Carr also launched investigations into several outlets and warned publicly that a probe into CBS' interview with Harris last year could affect the network's pending multi-billion-dollar merger. Trump has also amped up his rhetoric to attack the press, calling pollsters for the New York Times, ABC News, the Washington Post and Fox News 'negative criminals' who should be 'investigated for ELECTION FRAUD' after the outlets have published surveys in the past week that show he has net negative approval ratings. Get Forbes Breaking News Text Alerts: We're launching text message alerts so you'll always know the biggest stories shaping the day's headlines. Text 'Alerts' to (201) 335-0739 or sign up here. Trump—who has feuded with CBS for years—sued the network for $20 billion, claiming it deceptively edited its '60 Minutes' interview with Harris after the network in a preview of her interview aired a different version of Harris' answer to a question than the one shown in the full program. In the preview, Harris gave a longer answer in response to a question about the Israel-Hamas war than the one aired during the full show. The network later released a full transcript of the interview that showed it ran the first sentence of her answer in the preview and the last sentence during the show, though the meaning of her response was largely the same. Trump is suing CBS as its parent company, Paramount, is seeking the Federal Communications Commission's approval of a multi-billion-dollar merger with Skydance. Trump urged the FCC to revoke the network's broadcasting license last month over '60 Minutes' coverage of him, and FCC Chairman Brendan Carr has warned that the deceptive-editing allegations against CBS could become a factor in the FCC review of the merger. Meanwhile, Paramount and Trump began mediation talks earlier this month as Paramount owner Shari Redstone wants to settle with Trump, The New York Times reported, citing unnamed sources. The lawsuit has led to accusations from journalists that Paramount leadership has meddled in coverage of Trump, compromising their integrity. Wendy McMahon, president of CBS News and Stations, said she would step down Monday following a 'challenging' few months in which she and the company did 'not agree on the path forward,' ostensibly referring to the settlement talks. Longtime '60 Minutes' producer Bill Owens also left his post in April, citing waning editorial independence. Trump reportedly wants $25 million or more and an apology to settle the lawsuit, the Wall street Journal reported this week, citing an unnamed source. The Federal Trade Commission opened a probe in May into the liberal advocacy group, Media Matters for America, and whether it coordinated with other watchdogs to deter companies from advertising on Elon Musk's X, according to multiple reports. Musk is also suing Media Matters for defamation over a report it published about antisemitic content on X. Media Matters president Angela Carusone told Forbes in response to the probe 'the Trump administration has been defined by naming right-wing media figures to key posts and abusing the power of the federal government to bully political opponents and silence critics. It's clear that's exactly what's happening here, given Media Matters' history of holding those same figures to account. These threats won't work; we remain steadfast to our mission." PBS sued Trump Friday to block him from cutting funding for the public television station, days after NPR also filed a lawsuit to stop the move. Trump signed an order May 2 directing the Corporation for Public Broadcasting to cease funding NPR and PBS. The FCC also said it's opened investigations into NPR and PBS and whether they aired 'announcements that cross the line into prohibited commercial advertisements,' Carr said in a letter to the organizations in January. Carr said the investigation could factor into Congress' decision on whether to continue funding the organizations. NPR said in a statement in a news article about the threat that the funding cut 'would have a devastating impact on American communities across the nation,' adding that 'locally owned public media stations represent a proud American tradition of public-private partnership for our shared common good.' PBS CEO and President Paual Kerger told NPR the move would 'disrupt the essential service PBS and local member stations provide to the American people.' On April 29, the CPB sought a temporary restraining order to prevent Trump from removing three board members—two appointed by Biden and one appointed by Trump during his first term then reappointed by Biden—arguing the law that established the organization allows Trump to appoint board members, but not fire them. Carr has opened numerous investigations into media organizations and has echoed Trump's critical rhetoric of news coverage. 'We must dismantle the censorship cartel and restore free speech rights for everyday Americans,' Carr tweeted prior to his appointment as FCC chair. He also warned that 'broadcast licenses are not sacred cows,' suggesting the commission could revoke licenses for companies that don't 'operate in the public interest,' and he threatened that the FCC could block merger proposals from companies that promote DEI. In addition to the NPR and PBS probes, Carr has announced investigations into Comcast's diversity, equity and inclusion initiatives and a San Francisco-based radio station's coverage of an immigration raid. Comcast said in a statement to the New York Post in response to the probe that it would cooperate with the investigation and built the company 'on a foundation of integrity and respect for all of our employees and customers.' The FCC doesn't distribute and can't revoke licenses for entire networks and instead oversees licensing for their affiliated local broadcast channels. Cable networks, such as CNN and MSNBC, are not within its jurisdiction since they don't broadcast on public airwaves. Stations could fight any attempt to revoke their licenses in court, and laws that dictate their regulatory authority would make it highly unlikely, if not impossible, to pull a station's license. The FCC is prohibited, for example, from 'engaging in censorship or infringing on First Amendment rights of the press.' Licensing and merger decisions require the approval of the full commission, which is made up of the chair and four members appointed by the president and confirmed by the Senate for five-year terms. One of the commission's two Democrats, Geoffrey Starks, announced last month he would resign this spring, and a third Republican seat is vacant. About one-third of Voice of America's workforce was terminated earlier this month, Kari Lake, senior adviser for the organization's parent company, the U.S. Agency for Global Media, told multiple outlets in a statement that said 'buckle up, there's more to come.' The move comes after Lake—a special adviser to the U.S. Agency for Global Media, parent company for international broadcaster Voice of America—announced a 'partnership' earlier this month with the conservative One America News Network to broadcast its programs on USAGM networks, including the Office of Cuba Broadcasting, Radio Martí and Voice of America. U.S. District Judge Royce Lamberth on April 22 ordered the Trump administration to restore funding for Voice of America, Radio Free Asia and Middle East Broadcasting Network and rehire all staff, halting an executive order Trump signed in March to shut down the government-funded news organizations. Trump, claiming Voice of America was 'anti-Trump' and pushed 'radical propaganda,' revoked funding for the VOA and its parent company, the U.S. Agency for Global Media, which oversees Radio Free Europe and Radio Free Asia, prompting the organizations to place more than 1,300 employees and hundreds of contractors on leave. Lamberth, who is overseeing six lawsuits opposing the shutdown, ruled the move was likely unconstitutional since the organization was created by and is funded by Congress. On April 29, Lamberth ordered the Trump administration to reinstate $12 million in funding that had previously been appropriated to Radio Free Europe, saying in the ruling the Trump administration cannot take away money that Congress allocated, the Associated Press reported. The VOA, which has a budget of about $260 million annually and was formed in 1942 as a counter to Nazi propaganda, broadcasts in more than 40 languages to an international audience of more than 350 million. Radio Free Asia was formed in 1994 by the International Broadcasting Act and has a budget of about $61 million, and the Middle East Broadcasting Network was founded in 2004 and has a $100 million budget. The White House has attempted to bar the Associated Press from accessing some spaces, such as the Oval Office and Air Force One, after it refused to rename the 'Gulf of Mexico' to the 'Gulf of America' in its style guide. The Associated Press then sued the Trump administration over the blockade, and Judge Trevor McFadden ruled in the AP's favor earlier this month, though Trump has appealed the ruling. The White House also eliminated a permanent spot in the press pool reserved for wire services and instead put the AP, Bloomberg and Reuters in a rotation for two 'print' slots, along with 31 other outlets. The Trump administration announced in February it would decide which journalists are allowed in the White House press pool, breaking a years-long tradition in which the independent White House Correspondents' Association coordinated the pool, made up of 13 journalists from a rotating group of outlets who travel with the president and share their reporting with other media outlets. The Trump administration has also set up a 'new media' seat in the briefing room that's offered to outlets that don't have a permanent spot, such as Forbes, though it often hosts non-traditional media such as podcast hosts and social media personalities. Trump and his companies have filed multiple lawsuits against media organizations prior to his winning a second term. Trump Media & Technology Group, the parent company for Trump's Truth Social platform, filed a $1.5 billion lawsuit against 20 media organizations, including Forbes, The Guardian, Reuters, Axios and MSNBC, in November 2023, alleging they defamed him by incorrectly reporting that Truth Social lost $73 million from its launch in early 2022 through mid 2023. Many outlets, including Forbes, corrected their stories to say Truth Social had lost $31.6 million since its inception. In January 2023, Trump sued journalist Bob Woodward, publisher Simon & Schuster and parent company Paramount Global for nearly $50 million, claiming Woodward published recordings of his interviews with Trump for his book 'Rage' without Trump's permission. Trump in December also sued the Des Moines Register, its parent company, Gannett, and its former pollster, Ann Selzer, over a Selzer poll shortly before the election that found Trump would lose Iowa by three to four points, only for him to win the state by 13 points. Trump alleged the poll amounted to election interference and a violation of the Iowa Consumer Fraud Act. The paper and Selzer filed motions to dismiss the suit in February, and the Register alleged the law only applies to 'consumer merchandise,' and there's no evidence Trump ever purchased anything from the paper. Trump has had mixed results in his legal battles with the press. He settled with ABC News last year in a lawsuit Trump filed when anchor George Stephanopolos said Trump was found liable for 'rape' when a jury found him liable for sexually assaulting writer E. Jean Carroll. The network agreed to donate $15 million to Trump's presidential library and issue a statement of regret as part of the settlement. A judge in July 2023 dismissed a case he filed against CNN over its use of the term 'the big lie' to refer to his false claims he won the 2020 election and alleged comparisons between Trump and Hitler. F.C.C. Chair Orders Investigation Into NPR and PBS Sponsorships (New York Times) Which media companies has Donald Trump sued? (Reuters) '60 Minutes' Chief Resigns in Emotional Meeting: 'The Company Is Done With Me' (New York Times)
Bloomberg
17 minutes ago
- Bloomberg
Bank of Canada Likely to Hold as Uncertainty Mounts: Decision Guide
The Bank of Canada is likely to hold interest rates steady as officials wait for clearer signals on how US President Donald Trump's trade war will end up striking the economy. Economists and markets expect policymakers led by Governor Tiff Macklem to hold the overnight rate at 2.75% on Wednesday, which would be the second consecutive pause.
