Canada is a weird place. Having lived in Ottawa for several years, I have experienced first-hand both the differences and similarities between the United States and Canada.
But while the popular food, styles, and music are very different from the United States, investment styles are very similar. Canadian stock market investors utilize similar investment criteria to locate winning stock picks.
The crucial difference is in the philosophy of Canadian investors. Canadians tend to be much more conservative and risk averse than their American cousins. However, this observation is countered by the infamous Vancouver Stock Exchange (VSE). Although it is now defunct, the VSE was notorious for shaky companies, bad accounting, and investors getting wiped out!
Talk about a weird juxtaposition. One of the riskiest stock exchanges on earth was found in the conservative, buttoned-down-investment nation of Canada. But now, one of the world's most respected exchanges is domiciled in Canada. The Toronto Stock Exchange (TSX) is an ideal place to locate the best Canadian stocks.
I particularly like the security of stocks traded on both the NYSE and TSX. To be clear, I am in no way saying that cross-exchange listings mitigate all risk in a stock. That said, knowing the stringent listing requirements of both the both exchanges, I can rest easy knowing that at the very least these companies have passed extensive vetting.
3 Great Canadian Stocks
1. Prestige Brands Holdings (NYSE: PBH) / (TSE: PBH)
PBH is a Canada-based consumer staple stock that trades on both the TSE and the NYSE. Talk of overheated markets on both sides of the border makes the consumer staple sector a wise portfolio addition for risk-averse investors.
These are products that everyone needs regardless of the economy, making PBH among the best TSX stocks.
Shares are trading higher by over 10% this year and investors are anticipating solid results from the fiscal fourth quarter and full year 2016 earnings release on May 11.
In the third quarter of fiscal 2016, Prestige Brands posted strong results, with revenue higher by over 7% year-over-year. The company also saw a nearly 11% increase in EPS and Adjusted Free Cash Flow during the same time.
What I like best is the company's net debt plunged by over $251 million, signaling stability for the future regardless of economic conditions.
2. Rogers Communications (NYSE: RCI) / (TSE: RCI.B)
This $18 billion-plus communication company has soared higher by nearly 19% in 2017. Driven by strong wireless performance, the stock has set up to be an ideal TSX stock for an aggressive portfolio.
The company earned $294 million or 57 cents per share in the first quarter ending Mar. 31. On a per-share basis, this works out to be higher by 28% over last year.
At the same time, adjusted profit advanced 34% to $394 million or 64 cents per share.
A leadership shakeup has also bolstered investment sentiment. Rogers fired its CEO Guy Laurence in October. His replacement, former Telus Corp. CEO Joe Natale, took the helm in April.
What has me adding this stock to the best Canadian stocks to buy is the company's ramp up in wireless revenue and its plan to reignite its struggling television business. Both of these factors make RCI a strong contender for your portfolio.
3. Scotia Bank (NYSE: BNS) / (TSE: BNS)
A $66 billion-plus international bank and financial provider, BNS yields an impressive 4%, even though shares are slightly lower to flat this year. Fears of a housing bubble burst in Canada have helped suppress the share price, creating an ideal situation for value-seeking investors.
The company is well diversified geographically, with operations in America, Latin America, the Caribbean, Central America, and the Asia-Pacific region. The Bank offers a range of advice, products, and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets.
Technically, shares have found support at the 200-day simple moving average, creating an ideal buy signal for long-term investors.
Risks To Consider: The Canadian economy has never suffered a recession. However, that does not mean that a sharp downturn will not occur in the future. Always use stops and position size wisely when investing.
Action To Take: If you're looking for some diversification from the same familiar names in the United States, then consider adding these Canadian stocks to your portfolio.
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