In this article, we discuss 11 best TSX stocks to buy right now. If you want to skip our detailed discussion on Canada's economy, head directly to 5 Best TSX Stocks To Buy Right Now.
The Canadian economy successfully rebounded from the COVID-19 crisis, supported by the resilience of the labor market, despite global economic upheaval. According to the latest data from the OECD, Canada's economy experienced a growth rate of 3.2% in 2022, surpassing the averages of both the G20 (3.0%) and OECD (2.8%). However, the country still faces ongoing structural challenges resulting from the post-pandemic period, including inflationary pressure, slowed investment, and limited growth in productivity. Canadian households also continue to fight economic difficulties due to the rising cost of living in the short and medium term.
According to the Royal Bank of Canada (RBC), the currently robust labor market and the substantial amount of savings by Canadian households during the pandemic may postpone the complete impact of the tighter monetary policy. However, the increase in interest rates observed over the past year will still have negative implications. The increase in prices and interest rates has already offset the growth in Canadian household after-tax incomes in 2022, and it appears that this will continue in 2023 as well. RBC’s outlook suggests that it is likely for Canada to at least experience a "mild" recession, although the bank now anticipates that the decline in GDP will begin during the third and fourth quarters of 2023, which is later than it expected previously.
RBC believes that returning to the central bank's target inflation rate of 2% is dependent on a weakening economy. If the current positive momentum continues to outperform expectations, the Bank of Canada may need to raise interest rates more than initially anticipated. In June 2023, the Bank of Canada already ended the pause on interest rate hikes that began in January by implementing a 25-basis point increase. However, a "soft landing" appears unlikely. Even with short-term trends of economic growth, a bumpy landing is inevitable and only delayed. While higher prices and interest rates chip away at purchasing power, Canadian consumers still continue to spend. Housing markets have shown signs of recovery, with home resales and prices recovering in the spring, and the ratio of demand to available listings favoring sellers in some markets. RBC’s analysis of credit/debit card data indicates that spending on essential items and discretionary goods has remained flat, while spending on local entertainment, such as dining out, remains solid.
Canada is one of the richest countries in the world, indicating its ability to recover swiftly from economic setbacks. It is always a good idea to deal in safe investments, and Canadian stocks like Shopify Inc. (NYSE:SHOP), Canadian Pacific Kansas City Limited (NYSE:CP), and Suncor Energy Inc. (NYSE:SU) certainly fit the criteria.
Our Methodology
The following stocks are dually listed on the Toronto Stock Exchange (TSX) and American exchanges. We selected the following TSX stocks based on the hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the first quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm.
11. Restaurant Brands International Inc. (NYSE:QSR)
Number of Hedge Fund Holders: 27
Restaurant Brands International Inc. (NYSE:QSR) is a fast-food restaurant company with a presence in Canada, the United States, and internationally. The company is divided into four divisions – Tim Hortons, Burger King, Popeyes Louisiana Kitchen, and Firehouse Subs. On May 2, Restaurant Brands International Inc. (NYSE:QSR) reported a Q1 non-GAAP EPS of $0.75 and a revenue of $1.59 billion, outperforming Wall Street estimates by $0.11 and $30 million, respectively. The company also paid a $0.55 per share quarterly dividend on July 6.
According to Insider Monkey’s first quarter database, Restaurant Brands International Inc. (NYSE:QSR) was part of 27 hedge fund portfolios, compared to 32 funds in the prior quarter. Bill Ackman’s Pershing Square is the largest stakeholder of the company, with over 24 million shares worth $1.6 billion.
Like Shopify Inc. (NYSE:SHOP), Canadian Pacific Kansas City Limited (NYSE:CP), and Suncor Energy Inc. (NYSE:SU), Restaurant Brands International Inc. (NYSE:QSR) is one of the best TSX stocks to invest in.
Here is what Pershing Square Holdings specifically said about Restaurant Brands International Inc. (NYSE:QSR) in its Q2 2022 investor letter:
“Restaurant Brands International Inc. (NYSE:QSR)’s franchised business model is a high-quality, capital-light, growing annuity that generates high-margin brand royalty fees from its four leading brands: Burger King, Tim Hortons, Popeyes, and Firehouse Subs.
Franco-Nevada Corporation (NYSE:FNV) specializes in gold royalties and streaming, primarily operating in Latin America, the United States, Canada, and internationally. The company was established in 1986 and has its headquarters located in Toronto, Canada. Franco-Nevada Corporation (NYSE:FNV) is one of the best TSX stocks to invest in.
On June 8, Marathon Gold announced that it has reached an agreement to sell an extra 1.5% net smelter returns royalty (NSR) on its Valentine gold project in Newfoundland and Labrador to Franco-Nevada Corporation (NYSE:FNV) for a total of US$45 million. This transaction increases Franco-Nevada Corporation (NYSE:FNV)’s overall NSR ownership on the project to 3%. Additionally, Franco-Nevada made an offer to acquire Marathon's common shares.
According to Insider Monkey’s first quarter database, 31 hedge funds were bullish on Franco-Nevada Corporation (NYSE:FNV), compared to 27 funds in the earlier quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the largest stakeholder of the company, with over 2 million shares worth $309 million.
Here is what Horizon Kinetics has to say about Franco-Nevada Corporation (NYSE:FNV) in its Q3 2022 investor letter:
“Back to basic principles. We don’t hold gold in client portfolios, we hold gold royalty companies. The two have surprisingly little in common. The gold royalty company generates very impressive profits even if the gold price never rises, and it earns those profits year after year. Here is a long-term chart of Franco Nevada Corp., the premier gold royalty company vs. gold itself: a comparable gold price today than a decade ago, yet Franco Nevada returned 12.5% annually, matching the S&P 500 return, despite its nearsole source of revenues unchanged. What will Franco Nevada’s earnings and share price do if gold rises over the course of a decade?”
Nutrien Ltd. (NYSE:NTR) is one of the best TSX stocks to invest in. The company provides crop inputs and services, with its operations divided in Retail, Potash, Nitrogen, and Phosphate segments. Nutrien Ltd. (NYSE:NTR) reported significantly lower than expected adjusted earnings and revenues for the first quarter of 2023. The company attributed this shortfall to decreased realized prices in all segments and reduced sales volumes in retail, potash, and phosphate. Despite these challenges, Nutrien Ltd. (NYSE:NTR) anticipates a rise in demand in the second half of the year due to robust agricultural fundamentals, enhanced affordability for growers, and reduced inventory levels.
According to Insider Monkey’s first quarter database, 32 hedge funds were long Nutrien Ltd. (NYSE:NTR), compared to 40 funds in the earlier quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the largest stakeholder of the company, with 8.5 million shares worth $629.2 million.
“However, we believe this is exactly the kind of environment that separates the highest-quality companies from their peers and allows them to strengthen their competitive positioning. For example, Nutrien Ltd. (NYSE:NTR), a Canadian fertilizer company, was a top contributor during the quarter. While the war in Ukraine and economic sanctions on Russia have significantly reduced the output of two of the world’s largest agricultural producers, Nutrien has benefited from a strong global agricultural cycle and from farmers seeking to increase their output and capitalize on higher agricultural prices.”
Waste Connections, Inc. (NYSE:WCN) is a company that offers waste management services in the United States and Canada. The company’s services include the collection, transfer, disposal, and resource recovery of non-hazardous waste. Waste Connections, Inc. (NYSE:WCN) was established in 1997 and is headquartered in Woodbridge, Canada. On April 26, the company reported a Q1 non-GAAP EPS of $0.89, beating market estimates by $0.01. The revenue of $1.9 billion increased 15.9% on a year-over-year basis, in-line with Wall Street estimates. Waste Connections, Inc. (NYSE:WCN) is one of the best TSX stocks to watch.
According to Insider Monkey’s first quarter database, 35 hedge funds were bullish on Waste Connections, Inc. (NYSE:WCN), compared to 39 funds in the prior quarter. Henry Ellenbogen’s Durable Capital Partners is the largest stakeholder of the company, with 2.20 million shares worth $306.70 million.
TimesSquare Capital made the following comment about Waste Connections, Inc. (NYSE:WCN) in its Q3 2022 investor letter:
“Waste Connections, Inc. (NYSE:WCN) provides non-hazardous waste collection, transfer, and resource recovery services in the U.S. and Canada. Their shares rose 9% after topping second quarter estimates and raising forward guidance. This was driven by better-than-expected solid waste pricing and robust growth in the E&P waste business for oil exploration companies.”
Canadian National Railway Company (NYSE:CNI) is involved in the rail and transportation industry. They provide a range of services such as rail transportation, rail equipment, custom brokerage, transloading, and cargo distribution. Canadian National Railway Company (NYSE:CNI) is one of the best TSX stocks to invest in. On April 24, the company reported a Q1 non-GAAP EPS of C$1.82 and a revenue of C$4.31 billion, outperforming Wall Street estimates by C$0.10 and C$60 million, respectively. Canadian National Railway Company (NYSE:CNI) aims to achieve a 10%-15% growth in earnings per share from 2024 to 2026. They plan to achieve this by increasing volumes at a faster rate than the overall economy, implementing pricing strategies that surpass rail inflation, and making continuous improvements in efficiency.
According to Insider Monkey’s first quarter database, 39 hedge funds were bullish on Canadian National Railway Company (NYSE:CNI), compared to 41 funds in the prior quarter. Bill & Melinda Gates Foundation Trust is the biggest stakeholder in the company, with 54.8 million shares worth $6.4 billion.
Barrick Gold Corporation (NYSE:GOLD) is involved in the exploration, development, production, and sale of gold and copper properties. The company owns gold mines located in Argentina, Canada, C?te d'Ivoire, the Democratic Republic of Congo, the Dominican Republic, Mali, Tanzania, and the United States.
On July 17, Barrick Gold Corporation (NYSE:GOLD) announced its preliminary production figures for the second quarter of 2023, reporting an output of 1.01 million ounces of gold and 107 million pounds of copper. These numbers indicate an increase compared to the first quarter, when the company mined 952,000 ounces of gold and 88 million pounds of copper. The company stated that it remains on target to meet its full-year production guidance for both gold and copper. Barrick Gold Corporation (NYSE:GOLD) anticipates production to continue rising throughout the year, with the second half of the year expected to surpass the levels achieved in the first half.
According to Insider Monkey’s first quarter database, 41 hedge funds were bullish on Barrick Gold Corporation (NYSE:GOLD), compared to 40 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the largest stakeholder of the company, with 8.4 million shares worth $157 million.
In addition to Shopify Inc. (NYSE:SHOP), Canadian Pacific Kansas City Limited (NYSE:CP), and Suncor Energy Inc. (NYSE:SU), Barrick Gold Corporation (NYSE:GOLD) is one of the top TSX stocks to watch.
Old West Management made the following comment about Barrick Gold Corporation (NYSE:GOLD) in its Q4 2022 investor letter:
“Barrick Gold Corporation (NYSE:GOLD) is the second largest gold miner in the world, with operations in the U.S., Canada, Africa, South America and more. Barrick is also a major copper producer. Former Goldman Sachs executive John Thornton took control of the company in 2012 and quickly realized he wanted someone with a mining background to run the company. Mark Bristow, at that time CEO of Randgold, was considered one of the best gold mining executives in the world. Thornton wanted Bristow so badly Barrick bought Randgold in 2018. Bristow, who is South African, had extensive experience operating mines throughout Africa, and in fact would fly his own single engine plane to visit mines. He has his PhD in Geology, and he has flourished running Barrick the past five years.
