13 Prime TSX Shares to Purchase in Might 2022


Each month, we ask our freelance author buyers to share their finest inventory concepts with you. Right here’s what they stated.

[Just beginning your investing journey? Check out our guide on how to start investing in Canada.]

13 Prime TSX Shares for Might 2022 (Smallest to Largest)

  1. WELL Well being Applied sciences (TSX: WELL), $988 million
  2. Tamarack Valley Power (TSX: TVE), $2.1 billion
  3. BMO Equal Weight Banks Index ETF (TSX: ZEB), web property $2.8 billion
  4. Canadian Western Financial institution (TSX: CWB), $2.9 billion
  5. Descartes Methods Group (TSX: DSG), $6.8 billion
  6. TMX Group (TSX: X), $7.1 billion
  7. ARC Sources (TSX: ARX), $11.8 billion
  8. Algonquin Energy & Utilities (TSX: AQN), $12.8 billion
  9. Tourmaline Oil (TSX: TOU), $21.2 billion
  10. Fortis (TSX: FTS), $30.4 billion
  11. Alimentation Couche-Tard (TSX: ATD), $59 billion
  12. Canadian Nationwide Railway (TSX:CNR), $109.7 billion
  13. Enbridge (TSX: ENB), $114.5 billion)

(MARKET CAPS AS OF APRIL 27, 2022)

Why We Love These Shares for Canadian Traders

WELL Well being Applied sciences

What it does: WELL Well being is a digital well being firm that additionally operates a community of outpatient medical clinics.

By Sneha Nahata: My prime inventory decide for Might is WELL Well being Applied sciences (TSX:WELL). The corporate continues to ship stellar gross sales development and has posted constructive adjusted EBITDA over the previous a number of quarters. Regardless of the financial reopening following the pandemic, WELL Well being continues to profit from larger omnichannel affected person visits. What’s extra, shares are low cost right now because of the current selloff in high-growth tech shares.

Given the continuing momentum in its enterprise, WELL Well being expects to ship worthwhile development in 2022, which is encouraging. Its diversified choices, give attention to opportunistic acquisitions, power within the U.S. section, larger affected person go to volumes, and intensive community of outpatient medical clinics bode nicely for development — and buyers.  

Idiot contributor Sneha Nahata has no place in WELL Well being Applied sciences.


Tamarack Valley Power

What it does: The corporate produces oil and gasoline.

By Robin Brown: Tamarack Valley Power (TSX:TVE) inventory is up 29% in 2022 alone. But, I feel there could possibly be additional upside for shareholders this yr. It’s a mid-cap oil and gasoline producer that operates in a number of the most financial and environment friendly performs in Western Canada.

The corporate has a free money circulation breakeven at US$35 per barrel. At ~US$100, this inventory is incomes an insane amount of money.

Tamarack simply elevated its dividend for June by 20%. It additionally introduced the potential for an enhanced dividend and/or share buyback within the second quarter. Regardless of its high-quality property and quickly bettering steadiness sheet, this oil inventory is affordable at solely 4.8 instances extra money circulation.

Motley Idiot contributor Robin Brown owns shares of Tamarack Valley Power.


BMO Equal Weight Banks Index ETF

What it does: This alternate traded fund invests in Canadian banks.

By Amy Legate-Wolfe: The Large Six Banks show time and again why they’re a terrific funding: Traders take pleasure in safety throughout catastrophic financial occasions, sturdy share development, dividends, and the peace of thoughts that the banks will most likely be round for a superb, very long time.

Quite than investing in each individually, I might select the BMO Equal Weights Banks Index ETF (TSX:ZEB). You get the efficiency of the Large Six Banks, entry to all their dividends, and the safety of an ETF administration staff.

Proper now you possibly can decide up this ETF with a dividend yield of three.3%, which ought to give your portfolio strong safety in right now’s risky market.

Idiot contributor Amy Legate-Wolfe has no place in BMO Equal Weights Banks Index ETF.


Canadian Western Financial institution

What it does: The financial institution’s roots are in business lending to grease firms.

By Kay Ng: Canadian Western Financial institution (TSX:CWB) experiences larger volatility than its larger banking friends … which implies it presents buyers a greater worth when oil costs dip. 

At writing, the WTI oil worth had fallen greater than 4% on the day, breaking the US$100-per-barrel psychological threshold. Though Canadian Western Financial institution has lowered its mortgage publicity in Alberta over time, it nonetheless has about 31% of its loans within the resource-rich province. Consequently, the financial institution inventory dipped together with the value of oil. 

I consider shares ought to have the ability to commerce for about $40 once more sooner or later. Traders within the meantime get a reduction and a 3.7% yield.

Idiot contributor Kay Ng has no place in Canadian Western Financial institution.


Descartes Methods Group

What it does: Its software program improves supply-chain logistics and productiveness.

By Puja Tayal: My prime inventory decide for Might is Descartes Methods (TSX:DSG). The tech inventory has dipped virtually 20% throughout the large trade selloff this yr, however I feel the shares are oversold and have vital upside as e-commerce and journey decide up seasonal velocity within the second half of the yr. 

The conflict in Ukraine has disrupted the worldwide provide chain and created a short-term bearishness within the inventory. But airline and marine shipments are re-routing, and industries are searching for new suppliers. All this requires supply-chain optimization, creating nice alternative for Descartes. As commerce from alternate provide chains picks up, Descartes buyers stand to revenue.

Idiot contributor Puja Tayal has no place in Descartes Methods.


TMX Group

What it does: TMX Group owns a number of investing markets, together with the Toronto Inventory Trade and the TSX Enterprise Trade.

By Tony Dong: My bull thesis for purchasing shares of TMX Group (TSX:X) has all the time been: “If you happen to’re going to spend money on Canadian shares, why not simply purchase the corporate that runs the Toronto Inventory Trade?” 

TMX Group inventory has overwhelmed the market since 1999, and the corporate has some glorious fundamentals, similar to a 53% working margin and 33% revenue margin. Earnings rose 22% in the newest quarter from a yr earlier, and income grew 15%. It additionally has some very engaging valuation metrics, similar to a P/E of 18.12, P/S of seven.35, P/B of 1.93, and EV/EBITDA of 8.05. 

The inventory is at present buying and selling beneath its 52-week excessive of $145.69 with a beta of 0.62, making it considerably much less risky than the market. TMX Group yields 2.57%, and the corporate elevated the dividend to $0.83 per share again on March 11.

Idiot contributor Tony Dong has no place in TMX Group.


ARC Sources

What it does: ARC produces oil and gasoline.

By Vishesh Raisinghani: The vitality disaster continues to be the theme for buyers within the months forward. Crude oil and pure gasoline are already buying and selling at multi-year highs and will surge larger as Europe shuns Russian vitality. Canadian producers like ARC Sources (TSX:ARX) are anticipated to plug the hole. The inventory is already up 126% over the previous yr, but it’s nonetheless buying and selling at simply 13.5 instances earnings. This upward development might proceed for the remainder of 2022. Traders might additionally count on a surge in dividend payouts as the corporate’s money flows enhance. Control this chance in Might. 

Idiot contributor Vishesh Raisinghani has no place in ARC Sources.


Algonquin Energy & Utilities

What it does: The diversified vitality firm offers greater than 1 million buyer connections, primarily within the U.S. and Canada.

By Nicholas Dobroruka: My prime decide in Might is a reliable Dividend Aristocrat, Algonquin Energy (TSX:AQN).

The utility inventory can lend your portfolio each defensiveness and passive earnings, in addition to market-beating development potential.

Shares of Algonquin Energy are up a market-beating 45% over the previous 5 years. And that’s not even together with the corporate’s near-5% dividend yield, both.

I’m not anticipating market volatility to finish anytime quickly. So any investor who’s over-indexed in high-growth shares (together with myself!) could be clever to diversify a bit with a reliable utility inventory like Algonquin Energy.

Idiot contributor Nicholas Dobroruka has no place in Algonquin Energy.


Tourmaline Oil

What it does: The corporate is Canada’s largest pure gasoline producer.

By Vineet Kulkarni: Tourmaline Oil (TSX:TOU) is ready to report first-quarter earnings on Might 4. The numbers will probably be far larger than final yr, pushed by pure gasoline’ epic ascent this yr. The shares have rallied 160% since final yr, outperforming peer vitality shares.

Tourmaline’s sturdy free money flows may allow one other particular dividend or a quarterly dividend hike. The corporate is already sitting on a money hoard, with superior earnings development in the previous couple of quarters.

The inventory is buying and selling at 10 instances earnings, even after a steep rally. I feel it may possibly climb nonetheless larger given the anticipated strong earnings development, at present undervalued share worth, and supportive macroenvironment.

Idiot contributor Vineet Kulkarni has no place in Tourmaline Oil.


Fortis

What it does: The corporate is a utility.

By Jed Lloren: Like lots of my fellow authors’, my prime inventory in Might is a utility firm. I consider you must look into Fortis (TSX:FTS) this month. The market continues to be risky, and I want to stay with dependable firms throughout instances like these. For those who aren’t acquainted, Fortis offers regulated gasoline and electrical utilities to greater than 3.4 million clients. 

Fortis shouldn’t expertise any vital slowdown in its enterprise within the coming months, so its income and earnings ought to stay secure. If something, that’s a superb start line for buyers to contemplate.

Idiot contributor Jed Lloren has no place in Fortis.


Alimentation Couche-Tard

What it does: The corporate is a worldwide chief within the comfort retailer and gasoline station enterprise.

By Stephanie Bedard-Chateauneuf: Within the present risky market, Alimentation Couche-Tard (TSX:ATD.B) seems to be like the proper protected haven. This undervalued inventory has secure earnings and double-digit development, making it my prime inventory for Might.

Couche-Tard shares are undervalued, buying and selling at simply 17.6 instances earnings per share in contrast with 21.3 for the TSX. Within the firm’s most up-to-date quarter, web earnings elevated by 25% — and this double-digit development fee could possibly be sustained as the worldwide financial system recovers from the pandemic.

Couche-Tard has been rising its dividend yearly for greater than a decade. Its five-year dividend development fee is nineteen%, which is excessive in contrast with the typical dividend-growth inventory. Couche-Tard has a ahead dividend yield of 0.8%.

Idiot contributor Stephanie Bedard-Chateauneuf owns shares of Alimentation Couche-Tard.


Canadian Nationwide Railway

What it does: The railroad’s tracks span Canada from coast to coast and prolong south to the Gulf of Mexico.

By Jitendra Parashar: Canadian Nationwide Railway (TSX:CNR) is my prime inventory decide for Might 2022. Its inventory fell sharply after the corporate’s first-quarter outcomes missed analysts’ estimates — though CN Rail posted a 7.3% year-over-year rise in adjusted earnings for the quarter. Headwinds similar to larger gas prices, excessive winter circumstances, the weak Canadian grain crop, and provide chain points all affected the rail large’s outcomes.

Nevertheless, I contemplate most of those exterior components momentary, which shouldn’t have an effect on CN Rail’s long-term development outlook. That’s why I feel dividend buyers ought to contemplate profiting from the current dip to purchase the dependable inventory at a cut price worth.

Idiot contributor Jitendra Parashar has no place in Canadian Nationwide Railway.


Enbridge

What it does: Enbridge owns an unlimited pipeline community, together with Canada’s largest pure gasoline distribution firm.

By Karen Thomas: Enbridge (TSX:ENB) is one among Canada’s main vitality infrastructure firms, transporting and distributing oil and gasoline in its intensive North American pipeline system. It’s my prime decide for Might for a couple of causes: rising oil and gasoline costs, rising dividends, and its present 6% dividend yield. Principally, Enbridge is firing on all cylinders, but the inventory worth nonetheless doesn’t replicate this, in my opinion.

Trying forward, Enbridge ought to proceed to profit from the more and more bullish pure gasoline market, which is opening as much as the worldwide market by means of elevated liquefied pure gasoline (LNG) exports in addition to pure gasoline by-product exports.

Idiot contributor Karen Thomas owns shares of Enbridge.

By Andrew Button: My prime inventory for Might is Enbridge (TSX:ENB)

Power shares had been the large winner within the first quarter, however within the final weeks of April, oil costs began to drop. It’s doable that the get together is coming to an finish. A pipeline inventory like Enbridge is an ideal play if you wish to spend money on vitality however aren’t certain costs will preserve rising. Not like built-in vitality firms, pipelines don’t lose cash when oil costs go too low. In 2020, when built-in firms similar to Suncor Power (TSX:SU) posted adverse earnings, Enbridge merely posted a slight decline in earnings. That is typical of pipelines, that are considerably delicate to grease costs however not as a lot as built-in oil firms are. So, Enbridge is a strong decide for this late stage of the oil rally, when continued worth positive factors are a lot much less sure than they had been earlier than.

Idiot contributor Andrew Button has no place in any of the shares talked about.

Methods to Put money into These Prime Canadian Shares

If you happen to’re new to investing, please learn our newbie’s investing information. It’ll stroll you thru all of the fundamentals, together with how a lot of your cash is prudent to speculate and methods to discover out which type of shares are best for you.

Our writers are enthusiastic about every of the shares on this checklist, however they’re most likely not all up your alley. Begin with the funding concepts that talk to you — and be at liberty to disregard those that don’t.

Good luck and Idiot on!

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