Yahoo Finance 1 Growth Stock With Legit Potential to Outperform the Market
Written by Adam Othman at The Motley Fool Canada
Stock market investing is an excellent way to get good returns on your capital. As an investor, nothing is better than getting market-beating returns. Whether it is growth through capital gains, shareholder dividends, or both, the TSX boasts plenty of opportunities for savvy investors.
Considering the state of the economy, relying solely on your job for income is a big mistake. When you have money set aside, leaving it in a bank to earn interest income cannot help you keep pace with inflation. With the money invested in the right growth stocks, you can get far better returns to achieve your goal of financial freedom.
This is why today we will look at a top TSX growth stock that can offer you market-beating returns through capital gains and dividends. This stock has already outperformed the rest of the market this year, and it looks set to continue delivering great results.
Franco-Nevada
Franco-Nevada (TSX:FNV) is a mining company with a focus on gold royalties and streaming headquartered in Toronto. As of this writing, it trades for $163.32 per share, up by 9.94% year to date. In the same period, the S&P/TSX Composite Index is up by 4.86%.
The Canadian benchmark index indicates the state of the broader Canadian stock market. While it is up significantly this year, Franco-Nevada stock has outperformed the market. To make things even better, the stock also pays its shareholders quarterly dividends at a 1.21% dividend yield.
Financially strong company
FNV stock is a gold-focused royalty and streaming company. However, it also boasts a diversified portfolio that also includes assets related to other precious metals, gas, oil, and other commodities. The company’s business model allows it to enjoy a lower degree of risk than other mining companies in its operations.
Since it focuses on royalties and streaming, it also generates more stable cash flows than other peers in the mining industry.
The business model allows FNV stock to enjoy considerable financial strength. Its earnings report for the first quarter in fiscal 2024 saw it report $307.4 million in earnings and its net income was $174.9 million. In the same quarter last year, its earnings and net income were $300.2 million and $158.1 million, respectively.
Due to improved cost efficiencies and higher gold prices, FNV stock also reported earnings before interest, taxes, depreciation, and amortization (EBITDA) at $249.7 million for the quarter, showing that its performance keeps improving each quarter.
Foolish takeaway
Over the last five years, the share prices for FNV stock are up by 55.82%. In the same period, the Canadian benchmark index has seen a 34.26% growth, highlighting the fact that FNV stock has outperformed the stock market for a while. Compared to other mining stocks, FNV stock also has lower volatility due to its business model.
Due to macroeconomic uncertainties, gold continues to trend upward. Combined with inflationary pressures, gold prices might keep climbing. These factors mean there is more potential for Franco-Nevada stock to deliver growth due to better profitability. The company’s diversification into other assets also offers it a good hedge against fluctuations in gold prices.
FNV stock has also increased its dividends for the last ten years, with its payouts covered comfortably by earnings. It can be a good stock to own to enjoy market-beating returns for the coming years.
The post 1 Growth Stock With Legit Potential to Outperform the Market appeared first on The Motley Fool Canada.
Should you invest $1,000 in Franco-nevada right now?
Before you buy stock in Franco-nevada, consider this:
The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Franco-nevada wasn’t one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.
Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $17,363.76!*
Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 26 percentage points since 2013*.
See the 10 stocks * Returns as of 6/3/24
More reading
Can You Guess the 10 Most Popular Canadian Stocks? (If You Own Them, You Might Be Losing Out.)
How to Build a Bulletproof Monthly Passive-Income Portfolio in 2024 With Just $25,000
Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
2024
