Written by Christopher Liew, CFA at The Motley Fool Canada
Since surging 4% month on month from January to February 2021, the S&P/TSX Composite Index index finished higher every month-end until July. As of August 20, 2021, the year-to-date gain is 16.67%. As the economy rebounds, the upward trend should continue.
Many companies are back or close to pre-crisis shape. Three names from different sectors are must-buys before the next market spike or if you were to ride on the TSX’s bull market.
Canada’s banking sector has once more shown resiliency in navigating challenging periods. You can invest in any Big Six banks, although the Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) or Scotiabank should stand out to income investors.
The $97.02 billion and pays the highest dividend (4.52%) versus its industry peers. Similarly, at $79.93 per share, current investors are up 20.41% year-to-date gain. Scotiabank prides itself on having the competitive scale that drives growth.
Apart from Canada (70%), the bank derives revenue from markets in the Pacific Alliance region (17%), U.S. (7%), Central America, and the Caribbean (3%). Its wholesale operations extend to Asian countries such as China, Japan, Hong Kong, and Singapore.
The multinational, full-service universal bank had $5.2 billion excess cash after Q2 fiscal 2022 (quarter ended April 30, 2020) due to lower provision for credit losses (PCLs). Scotiabank’s profits could have been higher if not for the low-interest-rate environment, which remains the headwind for banks.
Contracted and regulated revenues
Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP) will soon own 68.9% of a pipeline company’s common shares. Bloomberg reports that the infrastructure arm of Brookfield Asset Management won enough support from investors on its $8.6 billion ($6.8 billion) takeover of Inter Pipeline.
The $21.08 billion company figured in a hard-fought corporate battle with Pembina Pipeline to acquire Canada’s fourth-largest pipeline company. With Inter Pipeline almost in the bag, the share price has gone up past $70 again. Thus far, in 2021, the stock’s gain is 13.3%. The share price is $71.35, while the dividend yield is 3.57%.
Brookfield Infrastructure owns and operates high-quality, long-life assets in the utilities, midstream, and transport sectors, not to mention data. Its growing assets are in North & South America, Europe, and the Asia-Pacific region. Since revenues from the infrastructure assets are contracted and regulated, cash flows are predictable and stable.
Strong business momentum
Kinaxis (TSX:KXS) is a great choice if you want the best growth stock option. The $5.13 billion company from Ottawa offers cloud-based subscription software for supply chain operations. While the tech stock underperforms with a mere +4.3% year-to-date gain, market analysts recommend a strong buy rating.
Their forecast is a price climb of between 5.89% and 19.17% from $188.09 in the next 12 months. Management reported a 2% slide in Q2 2021 versus Q2 2020, although the year-over-year growth in annual recurring revenue was 24.3%.
Kinaxis President and CEO, John Sicard said the three consecutive quarters of strong business momentum are excellent indicators. The company expects to end the full year 2021 with total revenues of US$242 to US$247 million. Its Software-as-a-Service (Saas) revenue growth would be between 17% and 20%.
The financial (+5.65%), technology (+5.30%), and utility (+2.57%) sectors are top advancers in the last 30 days. Now is the perfect time to take positions in Scotiabank, Brookfield Infrastructure, and Kinaxis before the next spike.
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Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Brookfield Asset Management. The Motley Fool recommends BANK OF NOVA SCOTIA, Brookfield Asset Management Inc. CL.A LV, Brookfield Infra Partners LP Units, Brookfield Infrastructure Partners, KINAXIS INC, and PEMBINA PIPELINE CORPORATION.