Investing in top TSX stocks with fundamentally strong companies can help generate above-average returns over time. S&P/TSX Composite Index has been on an upward trend and many Canadian stocks have rallied, some still have solid upside potential and will likely offer huge returns over the long term.
With this background, here are my top picks that are poised to deliver solid growth. Additionally, these stocks will help diversify your portfolio and reduce risk.
Stock No. 1
Late-Night Feeding (TSX:ATD) is one of the top TSX stocks to buy right now as it will bring stability, growth and income to your portfolio. Furthermore, its shares are undervalued and trade at a forward price-to-earnings (P/E) ratio of 18.2, which is lower than its peers. dollarama and LoblawWhile Couche-Tard shares look attractive in terms of valuation, the company is steadily growing its revenue and earnings, indicating that the upward trend could continue.
Couche-Tard is well positioned to benefit from its defensive business model and pricing strategy. In addition, its acquisitions will help expand its store base and accelerate its growth. In addition, the convenience store operator's focus on reducing operating costs will cushion earnings and cash flows. Furthermore, its strong balance sheet positions it well to capitalize on growth opportunities.
Stock #2
Go easy (TSX:GSY) is another attractive stock that is poised to deliver notable gains. Shares of this financial services company have appreciated more than 246% in five years and have consistently outperformed the broader stock markets. Its ability to grow its finances at a solid pace and focus on enhancing shareholder value with higher dividend payouts acts as a catalyst.
Goeasy stock has significant growth opportunities. Its leadership in Canada’s subprime lending sector, a large addressable market, and a growing consumer loan portfolio will boost its revenues. In addition, geographic expansion, diverse funding sources, and new product launches will accelerate its growth. Furthermore, its strong credit underwriting capabilities and improved operational efficiency will bolster its earnings and support higher dividend distributions and a higher share price.
Stock No. 3
Aritzia (TSX:ATZ) has seen impressive growth of over 128% over the past year, supported by its ability to grow revenue and net profit despite the challenging operating environment. In addition, the luxury apparel maker aims to grow revenue by 15% to 17% annually through fiscal 2027, which will likely boost its earnings and support its share price.
Aritzia’s growth will likely be driven by the expansion of its boutiques in high-demand areas. The clothing chain’s focus on new designs and assortments, expansion of omnichannel offering, and investments in supply chain and technology provide a solid foundation for future revenue and profit growth.
Stock No. 4
Investors might also consider buying shares of the energy giant Canadian Natural Resources (TSX:CNQ) for consistent capital gains and increased dividend income. Its shares have grown by more than 237% in five years. In addition, the company has increased its dividend for 24 consecutive years at a compound annual growth rate (CAGR) of 21%, thereby enhancing value for its shareholders.
The oil and gas company's high-value reserves, long-lived assets and focus on reducing operating costs will likely boost its earnings and support its share price in the years ahead. In addition, Canadian Natural Resources' strong balance sheet and low maintenance capital requirements bode well for growth.
Stock No. 5
Finally, investors could bet on celestica (TSX:CLS) to generate above-average returns. The company offers supply chain solutions. Its shares have gained over 121% in one year and are up over 591% over the past five years. However, Celestica shares have recently experienced a pullback. This offers an excellent buying opportunity as the stock has significant upside potential, due to its exposure to high-growth sectors such as artificial intelligence (AI).
Ongoing investments in data center infrastructure will likely boost demand for Celestica’s hardware platform solutions, supporting its revenue and earnings. Additionally, continued momentum in its aerospace and defense segment will also support growth.