Category Archives: Growth Investing

2 Top Stocks For December 2019 + Comments

Contributors at Motley Fool Canada (including myself) cooked up a list of 15 top stocks for December 2019. Actually, I had trouble choosing my top idea for this month as the market kept grinding higher. I chose Enbridge (TSX:ENB)(NYSE:ENB), a defensive name that’s fairly valued with a high dividend yield and a proven track record of dividend growth.

I’ll comment on some of my colleagues’ picks.

Another Solid Energy Dividend Payer

Two contributors picked TC Energy (TSX:TRP)(NYSE:TRP), a smaller peer of Enbridge in the energy infrastructure space. TC Energy is a quality dividend name also but Enbridge offers a bigger yield right off — 5.87% versus TC Energy’s 4.48%, which is just a little more defensive should a market correction happen soon.

The Renewable Energy Space

Two contributors chose a stock in the renewable energy space: Innergex Renewable Energy (TSX:INE) and TransAlta Renewables (TSX:RNW). Clean and renewable energy is a good space to be in as it has secular growth, but I don’t have a strong opinion about these two names in particular.

Given the run-up in utilities in general lately, I think it’s best for investors to consider the space when it’s out of favour again. 

hydropower plant in Ontario
Source: Author – A hydropower plant in Ontario
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5 Top Stocks for November 2019

Contributors at Motley Fool Canada (including myself) cooked up a list of 16 top stocks for November 2019. I further reduced it to 5 top stocks that I like not just for this month but for the long term as well.

Four of the 5 stocks pay a dividend, including 3 dividend stocks that offer juicy but safe yields of up to 6.1%. Without further ado, the 5 top stocks are Alimentation Couche-Tard (TSX:ATD.B), Enbridge (TSX:ENB)(NYSE:ENB), Pembina Pipeline (TSX:PPL)(NYSE:PBA), SmartCentres Real Estate Investment Trust (TSX:SRU.UN), and Spin Master (TSX:TOY).

Enbridge and Pembina are both energy infrastructure companies, but Enbridge is markedly larger with an enterprise value of almost CAD$174 billion compared to Pembina’s more than CAD$34 billion. The rest of the stocks are in different spaces and together handily make a pretty diversified and quality portfolio.

Alimentation Couche-Tard for long-term growth

Source: Author – One of Couche-Tard’s Circle K locations in Toronto

Couche-Tard just had a stock split recently. The growth stock has simply been taking a breather and consolidating after running up more than 50% from early 2018.

Couche-Tard is an exemplary M&A growth story. It has successfully acquired about 10,200 stores across 60 deals since 2004. In the period, the stock delivered total returns of 21% per year! 

The company only yields 0.6%, but its payout has shot up at a rocket pace — over 8 years, its dividend has increased at a compound annual growth rate of 27.8%! Its last dividend hike in fiscal Q3 was 25%!

Going forward, as Couche-Tard has matured and heading into its 40th year next year, it’ll be shifting its growth focus from 70% acquisitions and 30% organic in the past to 50% from each. Management still sees growth by acquisition opportunities in the fragmented fuel and convenience industry.

Today, at $39 and change per share, the stock trades at a forward price-to-earnings ratio (P/E) of 18.5, which implies a decent PEG ratio of about 1.6 based on the estimated earnings growth of 10.6-12.3% per year over the next 3-5 years. 

Enbridge offers a safe 6.1% yield and stable growth

Enbridge has worked hard and come a long way after taking on too much debt to acquire Spectra Energy in 2017 and selling off non-core assets to reduce the debt levels.

The stock was also depressed by delays in the Line 3 Replacement project. That said, if Enbridge successfully places the Canadian portion of the project into service as it plans to for this quarter, the stock should shoot up much higher by year end. 

ENB Dividend Yield (TTM) Chart

ENB Dividend Yield (TTM) data by YCharts

Assuming a fair yield of 4.5%, the stock should trade at CAD$65.60 per share. First, the stock needs to break above the CAD$50 resistance, though.

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2 Value Stocks to Buy in November

Want powerful price appreciation within the next 12 months? Both stocks of Spin Master (TSX:TOY) and Trip.com Group (NASDAQ:TCOM), which just changed its name and ticker from Ctrip.Com International (NASDAQ:CTRP) this month to reflect that it’s an international business versus one that’s focused on China, have a probable chance of doing so.

Source: Spin Master website; Fuggler (thought they’re fun as Halloween is coming up x_o)

Spin Master toys win a special place in children’s hearts

If there were only one toy company that would succeed, it’d be Spin Master. It has had the highest return on equity and profit margin when compared to larger peers Mattel (NASDAQ:MAT) and Hasbro (NASDAQ:HAS). 

TOY Return on Equity (TTM) Chart

TOY Return on Equity (TTM) data by YCharts

Innovation

Spin Master is innovative. Across six research and development (R&D) centres, it has a deep internal talent pool that comes up with new ideas. It also has about 200-300 third-party inventors who complement its internal R&D. This results in thousands of ideas being filtered down to 30-50 that will be commercialized every year.

It’s no wonder that, since 2000, Spin Master has received 103 Toy of The Year (TOTY) nominations with 30 wins across a range of product categories, including 13 TOTY nominations for Innovative Toy of the Year.

Spin Master’s latest novelty, which was launched in early October, is Owleez™, the first ever interactive toy pet that kids can teach how to fly. This new toy, along with five others from Spin Master, are on Walmart’s (NYSE:WMT) Top Rated By Kids list.

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