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On September 21, the Canadian market rallied after the re-election of Prime Minister Justin Trudeau’s Liberals Party with the assurance that Canada’s economy would keep improving. Economic and regulatory environments have a huge influence on an economy’s performance because government policies hugely affect business operations. Investors should decide their investment strategies depending on how these government policies impact each industry and its elements.
Fiscal policy under Trudeau’s Liberals Party is expected to remain loose, thus promoting businesses in general. The financial sector and renewable energy sector would have the maximum impact as the government is likely to impose a 3% tax on large banks and insurers, and might also remove fossil fuel subsidies within two years to reach a zero-emission target by 2050. Furthermore, the telecommunications industry might also witness some reforms as the government is eager to establish affordable and consumer-friendly internet and cellphone plans.
Top 5 Canadian Growth Stocks To Invest In For 2022
Goeasy is an Ontario-based alternative financial service company that gives easy loans mostly to the neglected and non-prime borrowers community in Canada. Owing to the risky business model, the company doesn’t have too much competition, and therefore with the help of its omnichannel platform, Goeasy has been able to consolidate market share quite rapidly. The company has besides gained a whopping 237% in the past year and 116% this year so far and it is clearly evident that the prospects won’t be dimmed by the new elections.
Moreover, this terrific performer has quite strong financials as well and as per its latest quarter report, it has grown its loan portfolio and adjusted net income by 58% and 50% YOY respectively. Goeasy is also a dividend aristocrat having a dividend yield of 1.27% that has managed to grow its dividend payouts since 2014 by a massive 776%. However, the best part is despite having such good prospects the stock trades a PE of only 15 times.
Ontario-based Brookfield Renewables is one of the top renewable energy producers in the world. Though the stock has gained about 20% in the past year, this year it has been under significant pressure and has lost about 13% this year so far. However, considering the ongoing political scenario in Canada, it is quite evident that this stock is going to be one of the biggest gainers in the coming times because the new government has enhanced the focus on reducing carbon emissions by 2050.
Also, as per a study by the Department of Energy, solar and wind energy would potentially contribute about 75% of the electricity needs in the US by 2035 and as Brookfield Renewables is expanding into the solar and wind energy sector, it is going to benefit a lot. Moreover, the clean energy revolution has just started and can significantly catalyze the company’s future growth.
Other than that, the stock has a dividend yield of 3.12% which is expected to grow annually by 5%-9%.
Telus is one of the biggest telecommunication players in Canada that is capitalizing quite well in the growing demand for communication services in today’s era of digitalization and increased use of work-from-home mechanisms. It has gained a decent 21% in the past year and 13% so far this year.
The company has been heavily investing in the 5G technology and has been expanding its 5G and broadband facilities around Canada with the intention of serving at least 70% of Canadians by the end of this year. It has also invested $1.95 billion in new licenses that can potentially aid in the expansion of its customer base. Moreover, as the new government has increased its focus on providing cheap and sustainable network facilities to the Canadian residents Telus is therefore going to have a glorious future.
Other than that, the company has a dividend yield of 4.41% which means investors would also get to earn passive incomes.
Constellation Software is one of the top-performing software companies in Canada that has a history of providing outsized returns to its investors. The company has integrated over 500 small companies under its umbrella over the years and in the past 15 years that stock has bestowed its long-term investors with over 11800% gains compared to the S&P/TSX Composite Index that had returned merely 78% during the same period.
Apart from proving such great returns the company also has a strong balance sheet and its portfolio consists of some highly competitive software companies. As a result, it can be well understood that its prospects won’t get hindered even if newer government policies get imposed. However, the stock is very costly and is currently trading at a PE of almost 104 times.
Royal Bank, Canada’s largest bank, is a multinational financial service company that serves over 16 million clients around the globe. The stock has provided attractive returns in the past and has gained a decent 33% in the past year. Even while facing difficult times, the bank has remained profitable unlike many of its peers, and now as the economy is recovering and interest rates are expected to go higher, the bank would be able to enjoy higher margins.
Also, by utilizing the extra funds it has accumulated, the bank might provide higher dividends to its investors or might enter into strategic acquisitions that will further boost its growth. Other than that, it might also roll out an aggressive buyback program.
The above-mentioned stocks are amongst the best-performing stocks available in the market presently that have strong core operations and very bright future prospects. Investing in such kind of stocks are always beneficial as the chances of incurring any kind of losses gets minimized by a large extent. Moreover, the certainty of earning passive incomes in these volatile times is also an added advantage one could get from these stocks. So, if you are willing to invest for the coming years you can choose any of these for your portfolios.