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- Adam Othman
Canadian REITs: A Great Way to Increase Your Monthly Income

man window buildings

The cost of living in Canada has been growing at an alarming rate. Different factors, from inflation to rising energy prices, have contributed to the country’s higher cost of living. Many Canadians are having difficulties making ends meet and have to adopt frugal living habits to cope with the affordability crisis.

However, there is an alternative. If you have any savings tucked away, it might be a good time to put them to work and start generating a passive income to augment your primary income. And a great way to do it is by investing in generous, monthly dividend-paying REITs. Canadian REITs are especially appealing now when the real estate bear market has placed a discount tag on so many.  

A grocery properties REIT

Grocery properties can be considered one of the safest segments of the retail real estate market. Among them, Slate Grocery REIT (TSX:SGR.UN) is a smart buy, but safety is not the only thing the REIT offers. The stock’s performance has been quite stable compared to most other Canadian REITs, and there is more to it than just the asset class.

The REIT has a completely American real estate portfolio, and the real estate market in the US is currently faring relatively better than the Canadian counterpart, which is laden down by a weak housing market.

From an income perspective, Slate Grocery REIT is a great pick, thanks to its mouthwatering 8.5% yield, supported by a healthy payout ratio of 50.5%. At this yield, the REIT can generate a monthly income of about $141 for you with $20,000 invested.

A healthcare properties REIT

Like groceries, healthcare is a business that is evergreen. And even though healthcare stocks in Canada don’t reflect this “stability,” you can experience it in a REIT like NorthWest Health Properties REIT (TSX:NWH.UN) and its incredibly stable run in the last five years. However, the stability streak has ended, and the stock, like the rest of the real estate sector, is sliding down hard.

It has already lost more than a quarter of its value, and considering the current direction of the stock; it may lose a lot more before stabilizing. But the fundamental strengths of the REIT are still the same. It has a strong international portfolio of healthcare properties, and most of them have mature, stable tenants.

The benefit of the downward slide has been a dividend yield boost, which has risen to 7.7%. If you invest $20,000 in the REIT, you can start generating a monthly income of about $128.

A commercial REIT

SmartCentres REIT (TSX:SRU.UN) is the leader in unenclosed shopping centers in Canada, and more than half of its centers are anchored by Walmart. This enhances the perceived value of the properties since Walmart has the potential to increase foot traffic. However, the REIT is now repositioning itself towards Smart Living – mixed-use communities.

It already has multiple residential towers, and a few more are under construction. With a strong present position and a promising future, SmartCentres can prove to be a healthy long-term investment. And to maximize your dividend-based returns from this long-term holding, you should try and lock in as good a yield as possible. The current 7.3% yield can help you generate an income of about $121 per month.

Foolish takeaway

Passive income is one of the most common goals of real estate investing in Canada, whether you are investing in rental properties or REITs. And even though property prices are plummeting now, they are still beyond the reach of most Canadians. This makes REITs a practical option.

The post Canadian REITs: A Great Way to Increase Your Monthly Income appeared first on The Motley Fool Canada.

Should You Invest $1,000 In NorthWest Healthcare Properties?

Before you consider NorthWest Healthcare Properties, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in September 2022 … and NorthWest Healthcare Properties wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 21 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks
* Returns as of 9/14/22

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More reading

3 Top TSX Healthcare Stocks to Buy in October Got $500? Buy 2 Cheap (Under-$20) Dividend Stocks With +5% Yields My 3 Favourite TSX Stocks for Passive Income Want Monthly Passive Income? Try These TSX Dividend Payers TFSA Passive Income: How to Easily Earn $425/Month TAX FREE!

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS and Smart REIT. The Motley Fool has a disclosure policy.

- Robin Brown
Should You Invest in Canadian Energy Stocks Right Now?

Man holding magnifying glass over a document

Canadian energy stocks have seriously outperformed in 2022. However, that trend could be unravelling. Oil prices have fallen 33% from US$120 per barrel to US$80 per barrel today.

So far, many Canadian energy stocks have held up relatively well. The S&P/TSX Capped Energy Index remains up 34.4% this year. That is compared to the broader S&P/TSX Composite Index, which is down -13%.

Canadian energy stocks vs. the TSX Forget the pullback – Here are reasons to be bullish on Canadian energy stocks

Despite the recent pullback, Canadian energy stocks continue to look attractive for several reasons. Firstly, oil supply is very tight right now. Years of underinvestment in energy production is leading to a structural deficit globally. Factors like the war in Ukraine, geopolitical tensions, and ESG activism only make this worse.

Secondly, years of low oil prices have forced Canadian energy companies to drastically lower their cost structure, increase efficiencies, and reduce debt. Many top energy companies can sustain their operating plans and maintain their dividends for US$40 per barrel or less. Anything above that is excess cash that the company can use to reinvest or give back to shareholders.

Pointing to the fact that Canadian energy stocks are earning a mountain of cash even at current prices, Canadian energy bull, Eric Nuttall recently Tweeted, “Every day above $80WTI is a great day.” Given the dynamic of sustained energy prices, strong cash flows, and improving balance sheets, Canadian energy stocks look like a great place to invest.

CNQ: A top Canadian dividend stock

If you are looking for smart, low-risk exposure to the sector, Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ) is the ideal stock. With a market cap of $74 billion, it the largest Canadian energy company.

Despite operating in a cyclical industry, CNQ has an incredible track record of paying growing dividends to shareholders. For 22 years, it has grown its base dividend by an average annual rate of 22%!

Right now, its stock pays a $0.75 quarterly dividend that equals a 4.67% dividend yield. That doesn’t factor in the $1.50 per share special dividend it paid in August either.

CNQ has exceptional, long-life assets, an extremely efficient operating model, and a market-leading management team. All these factors combine to make it a real contender for larger dividend payouts and stock upside if strong oil prices persist.

Tamarack Valley: A cheap Canadian energy stock with upside torque

With a market cap of only $1.8 billion, Tamarack Valley Energy (TSX:TVE) is an interesting small-cap Canadian energy stock. It is higher risk, but also has higher torque for capital upside. Its stock is down -1.6% in 2022, but up 18.8% over the past 52-weeks.

Tamarack trades with a 3.17% dividend today. However, it plans to increase its base dividend 25% after completing the Deltastream acquisition in November. After the acquisition, Tamarack will be a production leader in one of the most economic and efficient plays in Western Canada.

Right now, this Canadian energy stock is cheap. CNQ is trading for only 3.4 times free cash flow and earnings. If oil prices recover over the winter, it could have some serious upside ahead.

The bottom line

Canadian energy stocks are incredibly cheap and gushing tonnes of spare cash. Buy large-cap names for solid dividend growth or smaller cap stocks for significant capital upside. The recent oil pullback might be the perfect chance to dip your feet.

The post Should You Invest in Canadian Energy Stocks Right Now? appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Canadian Natural Resources?

Before you consider Canadian Natural Resources, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in September 2022 … and Canadian Natural Resources wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 21 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks
* Returns as of 9/14/22

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More reading

Why Canadian Natural Resources Fell 10% in September 2 of the Best TSX Growth Stocks to Buy in October Should You Buy Canadian Natural Resources (TSX:CNQ) Stock on the Pullback? 3 Top TSX Energy Stocks That Seem Ready to Soar Tax-Free Passive Income: 2 Top TSX Dividend Stocks for TFSA Investors to Buy Now

Fool contributor Robin Brown has positions in Tamarack Valley Energy Ltd. The Motley Fool recommends CDN NATURAL RES. The Motley Fool has a disclosure policy.

- Amy Legate-Wolfe
3 Top TSX Healthcare Stocks to Buy in October

Doctor talking to a patient in the corridor of a hospital.

October is upon us, and the market continues to dive further down. While there was an increase in the TSX last week, it wasn’t much to get excited about. The Canadian stock index continues to trade down 8.5% year to date, an improvement from 13% last week. However, it remains down by 16.5% from peak prices to today so far in 2022. Yet healthcare stocks may be just the place to store your money and keep your portfolio healthy.

The healthcare sector saw a lot of movement during the last few years due to the COVID-19 pandemic. However, it’s important to separate strong stocks from market flukes.

That’s why today I’m looking at three healthcare companies investors should consider as the TSX continues to trade in value territory.

WELL stock

WELL Health Technologies (TSX:WELL) surged during the pandemic as the world over was told to stay home. The company provides technology to allow for virtual healthcare assistance. It’s one of the healthcare plays that soared as it aided patients with finding healthcare options.

However, once a vaccination was approved shares dropped. They dropped even further with the pushback on tech stocks. Yet WELL did nothing to deserve the punishment.

WELL Health continues to be the largest outpatient clinic in Canada. The company is expanding into the United States, and continues to post record earnings. In fact, it’s done so well it would only take 47.9% of its equity to cover all its debts. Even after shares dropped 37% year to date. Analysts believe the stock will more than double in the next year, so it’s one I’d at least watch for now, if not buy this October.

NorthWest REIT

Another healthcare pick I’d buy this month without a doubt is NorthWest Healthcare Properties REIT (TSX:NWH.UN). In fact, I already own Northwest stock, but am likely to buy more at these prices. NorthWest also saw a surge during the pandemic, but remained fairly stable only until recently with the second drop in shares on the TSX.

Yet again, it doesn’t deserve the drop. NorthWest stock continues to post record revenue as well thanks to its expanding healthcare properties around the world. The $2.6-billion healthcare stock is down 19% year to date, trading at 6.2 times earnings. This despite maintaining a 97% occupancy rate and average lease agreement of 14.1 years!

But with this downturn comes a great opportunity, the NorthWest stock dividend, now at a whopping 7.55%! You’re not going to see these prices for much longer, so if you need cash this is the stock I’d buy.

Bausch Health

Finally, Bausch Health Companies (TSX:BHC)(NYSE:BHC) falls into the middle ground. It’s seen volatility during the last few years, but analysts also believe there could be major growth in the years to come. This comes from the company ending disputes in court, and also breaking off its Bausch & Lomb arm to become its own company.

The stock has not done well this year, with shares down 72% year to date. But there is the chance it could explode in share price when we’re out of this downturn, with the companies both able to focus on its eyewear industry, as well as its medical device and over-the-counter products. But I won’t lie. This is definitely the riskier of the three healthcare industry stocks.

Bottom line on healthcare investing

There are plenty of healthcare companies out there offering a substantial opportunity. The pandemic isn’t over, but even with restrictions basically gone, these three have lots to look forward to. Whether it’s the stability of healthcare properties, the necessity of telehealth, or the emergence of growing products, all three healthcare picks give investors growth for their portfolio.

The post 3 Top TSX Healthcare Stocks to Buy in October appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Bausch Health Companies?

Before you consider Bausch Health Companies, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in September 2022 … and Bausch Health Companies wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 21 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks
* Returns as of 9/14/22

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Canadian REITs: A Great Way to Increase Your Monthly Income 3 Cheap Canadian Stocks to Buy Under $10 Got $500? Buy 2 Cheap (Under-$20) Dividend Stocks With +5% Yields 3 Stocks You Can Still Buy for Under $20 a Share My 3 Favourite TSX Stocks for Passive Income

Fool contributor Amy Legate-Wolfe has positions in NORTHWEST HEALTHCARE PPTYS REIT UNITS and WELL Health Technologies Corp. The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS. The Motley Fool has a disclosure policy.

- Christopher Liew, CFA
The Next Canadian Stock I’m Going to Buy

A colourful firework display

Most market observers agree that September is the worst month for stocks. In Canadian markets, this year is no different, following the 4.5% decline of the TSX from August 31 to September 30, 2022. The index fell 2.2% in Q3 2022 compared with Q2 2022. Canada’s primary stock market will start the fourth quarter with a 13% year-to-date loss.

Investors are anxious about the tightening monetary policies. Disconcertingly, economists believe that more rate hikes might push the economy into recession. However, if you want to invest in a declining market, consider buying the Toronto Dominion Bank (TSX:TD)(NYSE:TD) next. If you already own the Canadian stock, hold or purchase more shares.

Short-term pressure on Canadian banking stocks

Canada’s banking sector isn’t immune to market volatility and should weather the storm. Because of their financial stability, Big Bank stocks are staples in any investment portfolio, especially for dividend investors and retirees.

According to Patrick Kim, a partner at Georgian Capital Partners, the pressure of rising interest rates on bank stocks is short-term, and should lead to larger profits over the long term. Kim said, “We believe that the rising rates will support higher net interest income at the banks. Banks with strong capital structures are still well-positioned to keep increasing dividend payouts.”

With a market capitalization of $156.3 billion, TD is Canada’s second-largest lender. Though down 10.1% year to date, the bank stock is bound to rebound when the economy improves. At $84.72 per share, the dividend yield is an attractive 4.2%.

Growing businesses

Bharak Masrani, TD Bank Group’s President and CEO, said, “We enter the final quarter of fiscal 2022 with growing businesses, a powerful brand, and proven ability to drive consistent execution across the Bank. In a complex macroeconomic environment, we are well-positioned to continue investing in our business and create long-term value for our shareholders.”

In the first three quarters of fiscal 2022 (ended July 31, 2022), net income increased 2.3% year over year to $10.75 billion. Masrani cites the increased customer activity and TD’s deposit-rich franchise for the continued business momentum and strong financial performance.

Unquestionably, Canadian bank stocks are getting a boost from U.S. growth prospects. During the quarter, the net income of Canadian Retail and U.S. Retail Banking increased 6% to $2.3 billion and 11% to $1.4 billion, respectively, versus Q3 2021. The former generated a record $7 billion in revenue. Moreover, TD’s proposed acquisition of Cowen Inc. is expected to expand the bank’s presence in capital markets and accelerate its U.S. dollar growth strategy in Wholesale Banking.

Better scale and rate of return

Notably, TD will become the sixth-largest bank in the U.S. once it completes the acquisition of First Horizon by November 2022. TD’s expanding Southeastern footprint will serve as a significant regional hub in Memphis and Knoxville. Post-acquisition, the Canadian bank will have about $614 billion in U.S. assets and 1,560 branches in 22 states . 

Among Canadian banks, current and would-be investors should be comforted by TD’s staying power. TD has a dividend track record of 165 years. From the impending U.S. growth, investors can expect better scale and a higher stock return.

The post The Next Canadian Stock I’m Going to Buy appeared first on The Motley Fool Canada.

Should You Invest $1,000 In TD Bank?

Before you consider TD Bank, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in September 2022 … and TD Bank wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 21 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks
* Returns as of 9/14/22

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Fool contributor Christopher Liew 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.

- Joey Frenette
Why Alimentation Couche-Tard Stock Fell 5% in September

a Couche Tard store

Shares of convenience store giant Alimentation Couche-Tard (TSX:ATD) were down just north of 5% over the past month, thanks in part to broader market volatility. Undoubtedly, ATD stock has held its own far better than most names on the S&P 500, which sunk nearly 9% in the same time period. Though the TSX Index was down by a similar amount, I think Couche-Tard stock is shaping up to be a far better bet as we enter a recession year.

Undoubtedly, few firms have been spared from the broader stock market sell-off. The bear market has not yet made its way into Canada (the TSX is down around 17% from its highs), but this could change before year’s end. As a convenience retailer that’s done a magnificent job of preserving margins amid rising fuel costs and fewer visits, I suspect Couche-Tard will be less rattled than others as Canada sinks into negative GDP growth.

Couche-Tard isn’t just skilled at driving profits through the most challenging of economic climates; it’s a master at passing on value to consumers via its private label. Indeed, private labels have been key to the company’s ability to thrive in this period of high inflation.

Helping to elevate Couche-Tard’s stock over the past month was strong numbers in Q1 fiscal 2023 (delivered in late August). Per-share earnings of $0.85 beat the consensus of $0.73. Revenue also came in at a solid $18.7 billion, up from $16.4 billion in the previous quarter. A major bright spot in recent quarters has been the progress of private label merchandise — a key area that could continue to enjoy upside momentum as inflation and stagflation weigh further.

Inflation and stagflation could bolster private label business

As the inflationary environment turns stagflationary, I expect private labels will continue to do the majority of heavy lifting for grocers and convenience retailers like Couche-Tard. In this environment, it’s all about getting the most value for your dollar at the convenience store. While Warren Buffett may tout the power of brands, I’d argue that inflation and difficult circumstances for consumers have eroded the power of brands relative to their more generic counterparts.

Indeed, pricier branded consumer-packaged goods have lost a bit of luster amid the private-label push. For example, grocery behemoth Loblaw has done a marvelous job of increasing brand awareness for its President’s Choice and No Name brands. Such brands aren’t just cheaper products that provide a margin boost for Loblaw. They’re an opportunity to really innovate, with intriguing Yuzu-based product offerings. This type of innovation may very well capture consumer interest and subsequently get them hooked on private labels.

Couche-Tard is continuing to challenge branded merchandise with offerings of its own. Thus far, the Circle K brand is a solid competitor among potato chips and other snacks. Now present in more than 26 countries and territories, Circle K has become one of the most widely recognized convenience store brands, known worldwide for quality products. Moving ahead, I anticipate Couche-Tard will continue innovating its private label to make even bigger strides over branded merchandise. On the margins front, Couche-Tard is on the right track.

The bottom line

As a steady earnings grower, I expect Couche-Tard to take less of a hit than the broader markets. At $55 and change per share, ATD stock currently trades at 15.2 times trailing price-to-earnings (P/E). That’s well below the five-year historical P/E of 16.6.

The post Why Alimentation Couche-Tard Stock Fell 5% in September appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Alimentation Couche-Tard?

Before you consider Alimentation Couche-Tard, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in September 2022 … and Alimentation Couche-Tard wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 21 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks
* Returns as of 9/14/22

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Fool contributor Joey Frenette has positions in Alimentation Couche-Tard Inc. The Motley Fool has positions in and recommends Alimentation Couche-Tard Inc. The Motley Fool has a disclosure policy.

- Vineet Kulkarni
Why Suncor Energy Stock Fell 10% in September

Canadian energy stocks are rising with oil prices

Oil and gas producer stocks have been on a worrisome downturn since June. Even though supply woes have grappled the global energy markets, the recession fears and subsequent demand decline fears have weighed on oil prices in the last few months. Canada’s largest oil sands player Suncor Energy (TSX:SU)(NYSE:SU) has also witnessed similar weakness. Suncor Energy Stock has lost 28% since June and 10% in September.

Why are energy stocks falling?

Oil producer stocks have a high correlation with energy commodity prices. So, the weakness in energy stocks has not been surprising, as crude oil fell by another 7% in September. TSX Energy stocks at large fell by 11%, while the TSX Composite Index fell by 6% last month.

Besides oil prices, share repurchases and balance sheet improvements have been other major drivers for TSX energy stocks. As Canadian energy stocks have been trading near their multi-month lows, share buybacks could gain steam, supporting their stock prices in the short term.

Till early August, Suncor Energy bought back 88.2 million shares this year worth $3.9 billion. Share repurchases ultimately increase the company’s per-share earnings and suggest management’s view that the shares are undervalued.

Although SU stock has dropped significantly from its record highs, the company has strong fundamentals. Solid earnings visibility, a deleveraged balance sheet, and juicy dividends make it an appealing name among TSX energy stocks.

Massive earnings growth

So far in 2022, Suncor Energy has reported free cash flows of $4.9 billion, against $2.2 billion in the same period last year. This incremental cash mainly went for debt repayments and shareholder returns. Its net debt declined from $18.7 billion in Q2 2021 to $15.7 billion in Q2 2022. As Suncor repays more debt in the second half of this year, a higher portion of its free cash will likely be used for share repurchases and dividends.

Suncor Energy is expected to pay a dividend of $1.88 per share, implying a nice annual yield of 5%. However, many of its peers have doubled their dividends this year, while the Suncor Energy stock dividend was only raised by 12% in 2022. Note that it’s not because Suncor has weaker financials. However, it has the potential and will likely increase shareholder payouts in the next few quarters.   

Bottom line

This has been a blockbuster year for TSX energy stocks, despite the recent downtrend. Energy producers saw record financial growth in Q2 2022, as oil prices jumped beyond US$130 per barrel. Suncor Energy has returned 50% in the last 12 months and 170% since the pandemic.

There are many strong reasons to be bullish on crude oil than being bearish. The cartel of oil-producing nations is considering cutting output by one million barrels of oil per month. This will enhance the demand-supply skew, bolstering oil prices. Moreover, the Russian energy supply seems uncertain to Europe and the US, which will further support higher prices.

As a result, the recent weakness in the Suncor Energy stock price seems overdone and the stock looks ripe to soar higher. The fundamental strength, mainly on the balance sheet front, is what differentiates Canadian energy stocks in this energy bull cycle.  

The post Why Suncor Energy Stock Fell 10% in September appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Suncor Energy?

Before you consider Suncor Energy, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in September 2022 … and Suncor Energy wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 21 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks
* Returns as of 9/14/22

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The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned.

- Rajiv Nanjapla
Why Canadian Natural Resources Fell 10% in September

Pipeline

The global equity markets were under pressure last month, with the S&P/TSX Composite Index falling 4.6%. After the Federal Reserve of the United States made its third interest rate hike of 75 basis points in a row, fears of recession led to a fall in equity markets.

Meanwhile, oil prices declined substantially amid the weakening global demand and recession fears. China’s zero-COVID policy led to a full or partial lockdown of 70 cities, thus weakening oil demand. West Texas Intermediate (WTI) crude fell by 11.2% last month. The decline in oil prices has caused a sell-off in oil-producing companies, including Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ). The stock price of the oil and natural gas producer fell by 10.7% last month. So, should you buy the stock after such a steep decline? Before moving to that question, let’s first look at the oil market outlook.

Oil market outlook

Despite the pandemic lockdowns in China and deteriorating economic outlook, the IEA (International Energy Agency) projects oil demand to rise by 2 million barrels per day in 2022 and 2.1 million barrels per day in 2023. Europe and the Middle East are increasing usage of oil for power production amid record natural gas prices. This demand is outweighing the decline in China’s energy usage during the lockdown.

Besides OPEC+ (Organization of the Petroleum Exporting Countries), which is meeting on October 5th, could announce a substantial cut in oil production. Many analysts believe OPEC+ is comfortable with Brent crude trading around US$90/barrel. So, analysts are projecting crude production cuts at around US$85/barrel as of September 30th. Besides, many analysts are bullish on oil and have given price targets of over US$100/barrel for 2023. So, the outlook for the oil market looks healthy. Now, let’s look at Canadian Natural Resources’ financials and growth initiatives.

Canadian Natural Resources’ performance

Amid higher commodity prices and increased production, Canadian Natural Resources has delivered solid performance in the first six months of this year, with its adjusted net earnings from operations growing by 166%. CNR generated adjusted fund flows of $10.4 billion during the period, thus delivering free cash flows of $6.7 billion. The company’s average natural gas production increased by 30% to 2,105 million cubic feet per day during solid drilling activities and acquisitions.

However, its liquid production declined by 9% due to the planned turnaround activities. With turnaround activities complete, both its mines are now operating at full capacity. The company, which had drilled 22 wells in the first six months, now expects to maintain its momentum in the second half. So, it raised its 2022 capital investment guidance by $200 million to $4.9 billion. Supported by these strategic investments, CNR’s management hopes to increase its 2023 production by 40,000 barrels of oil equivalent per day. So, the company’s growth prospects look solid.

Dividends and valuation

Canadian Natural Resources has an excellent track record of rewarding its shareholders through share repurchases and dividend hikes. Since 2010, it has repurchased 189.6 million shares for $9.3 billion. Besides, it has raised its dividends uninterruptedly for the last 22 years while its dividend yield stands at a healthy 4.67%.

Meanwhile, the company is currently trading at a discount of around 25% compared to its 52-week highs. Amid the steep pullback, CNR’s NTM (next 12 months) price-to-earnings has declined to 5.4, lower than its historical average.

So, considering its healthy growth prospects, stellar dividend growth track record, and attractive valuation, I believe the recent correction in CNR’s stock has provided an ideal entry point for long-term investors.

The post Why Canadian Natural Resources Fell 10% in September appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Canadian Natural Resources?

Before you consider Canadian Natural Resources, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in September 2022 … and Canadian Natural Resources wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 21 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks
* Returns as of 9/14/22

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More reading

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Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends CDN NATURAL RES. The Motley Fool has a disclosure policy.

- Jitendra Parashar
Why Tesla Stock Dived Over 8% Today

A stock price graph showing declines

What happened?

Shares of Tesla (NASDAQ:TSLA) tanked sharply today after the American electric carmaker released its third-quarter (Q3) 2022 quarterly car delivery numbers over the weekend. At the time of writing, TSLA stock was trading with about 8.4% losses for the day at $242.93 per share, extending its year-to-date losses to 31%. By comparison, the S&P 500 and NASDAQ Composite benchmarks have seen about 23% and 32% value erosion in 2022 so far.

So what?

In the third quarter of 2022, Tesla delivered 343,830 vehicles to its customers, up 42% YoY (year over year) and 35% from the previous quarter. These deliveries included 18,672 of its highly profitable Model S and X premium cars and 325,158 of its Model 3 and Y. Similarly, the company produced 365,923 vehicles last quarter, reflecting a solid 54% YoY and 42% sequential increase. With this, the Elon Musk-led company posted its highest quarterly car deliveries and production numbers ever. Given these record car deliveries and production numbers, you would expect TSLA stock to skyrocket and not tank the way it did today.

The key negative factor driving Tesla’s share prices sharply lower Monday was that its Q3 2022 vehicle delivery figures missed Street analysts’ apparently highly optimistic estimates, as widely reported in the mainstream media.

Now what?

In its latest vehicle deliveries and production report, Tesla clearly noted, “it is becoming increasingly challenging to secure vehicle transportation capacity and at a reasonable cost during these peak logistics weeks.” This justifies why the world’s largest automaker by market cap delivered fewer cars in Q3 than it produced, missing estimates by a narrow margin.

It’s important to note that these COVID-19 pandemic-driven supply chain disruptions have been affecting businesses worldwide since 2020. Nonetheless, Tesla’s record Q3 deliveries clearly reflect that it’s continuing to manage the ongoing global supply chain crisis far better than most other large carmakers. And I don’t think it should wary TSLA investors at all. But as they say, the market is not always rational.

Another important factor that Tesla investors are seemingly not paying attention to today is that the contribution of its highly profitable Model S and X in the Q3 2022 deliveries rose to 5.4% from just 3.8% a year ago. And this higher contribution of its more profitable cars in its total deliveries should help the electric car maker expand its margin for the quarter on a YoY basis. Given that, today’s sharp dip in TSLA stock today could be an opportunity for long-term investors to buy at a bargain.

The post Why Tesla Stock Dived Over 8% Today appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Tesla?

Before you consider Tesla, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in September 2022 … and Tesla wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 21 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks
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The Motley Fool recommends Tesla. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

- Christopher Liew, CFA
3 Expensive TSX Stocks I’d Buy if They Took a Dip

If the Bank of Canada tightens its monetary policy longer than necessary to bring inflation down, elevated market volatility will persist for the rest of 2022. However, despite strong headwinds, some stocks remain expensive.

If you expect a market pullback in Q4 2022, I’d recommend buying National Bank of Canada (TSX:NA), Constellation Software (TSX:CSU), and Canadian National Railway (TSX:CNR)(NYSE:CNI). These large-cap stocks are buying opportunities if their share prices dip due to more downward pressure.

Temporary weakness

National Bank currently trades at $86.58 per share, is down by 7.45% year-to-date, and is approaching its 52-week low of $82.38. The weakness is temporary, and the bank stock should eventually recover to top $100 in one year. Market analysts covering NA have a 12-month average price target of $102.25 (+18.1%). Meanwhile, the attractive 4.25% dividend yield is relatively safe while you wait for the rebound.

In Q3 fiscal 2022 (quarter ended July 31, 2022), net income declined 2% to $826 million versus Q3 fiscal 2021. Management said the solid performance of all business segments was partly offset by higher provisions for credit losses (PCLs). The $29.13 billion bank had to increase the PCL to $57 million because of the less favourable macroeconomic outlook.   

National Bank’s President and CEO, Laurent Ferreira, said, “We continue to operate in an increasingly complex backdrop.” Nevertheless, he adds that despite the challenges, Canada’s fifth-largest bank is in a solid position owing to its strong capital levels and substantial allowances for credit losses.

Likely tumble

Constellation Software isn’t winning in 2022 (-17.94% year-to-date), and another market sell-off could send the tech stock tumbling. The current share price is $1,922.09, so a drop to below $1,800 should be a good entry point. This Toronto-based firm is known for acquiring, managing, and building market-leading software businesses.

The reach of this $40.73 billion company is global (100 markets worldwide), and its software and services are used across various industries. Some of its specialized, mission-critical software solutions address the specific needs of particular industries. Constellation derives revenue from software license fees, maintenance & other recurring fees, professional service fees, and hardware sales.

In Q2 2022, revenue and net income grew 30% and 43% respectively to US$1.61 billion and US$126 million versus Q2 2021. Constellation’s business model and vertical integration across specific business lines provide the company with competitive advantages. Because of its sufficient cash flows and available credit facility, management said it can continue to grow the business organically without additional funding.

A no-brainer buy

Canadian National Railway is a no-brainer buy for long-term investors. The $101.75 billion company owns legacy assets (railway networks) that are essential to the Canadian economy. As a transportation leader, CNR transports 300 tons of natural resources, manufactured products, and finished goods in North America each year. It is the only railroad that connects Canada’s coastlines with the United States through a rail network that spans 18,600 miles.

At $149.18 per share, the industrial stock underperforms year-to-date (-2.93%) and pays a modest 1.96% dividend. These dividend payouts have increased at an annual rate of 12% in the last five years.

Management expects bigger volume in the second half of 2022, following the record revenue of $4.34 billion in Q2 2022. However, this stock could still experience a pullback from current levels due to the challenging macro environment. Market analysts’ low-price target is currently set at $145 (-2.9%). Considering its significant growth prospects, this is a great stock to consider buying on the dip. CNR is expected to increase adjusted earnings at an annual rate of 15% in the next five years.

Next market correction

Keep NA, CSU, and CNR on your watchlist this quarter and consider scooping them up as long-term holds if they take a dip in the next market correction.     

The post 3 Expensive TSX Stocks I’d Buy if They Took a Dip appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Canadian National Railway?

Before you consider Canadian National Railway, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in September 2022 … and Canadian National Railway wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 21 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks
* Returns as of 9/14/22

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Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Canadian National Railway and Constellation Software. The Motley Fool has a disclosure policy.

- Daniel Da Costa
5 Things to Know About Air Canada Stock

An airplane on a runway

After taking an enormous blow from the pandemic, Air Canada (TSX:AC) has been one of the most popular Canadian stocks over the last few years. If you’re interested in buying Air Canada stock before its recovery, here are five of the most important things to know about it in October 2022.

Air Canada reports earnings on October 28

Earnings are key to determining how a stock will perform in the short-term, particularly in this environment. This is especially true for Air Canada stock which has been impacted for years. Solid earnings could result in significant upside, while disappointing results could cause the stock to fall in value once again.

But as you’ll see below, even if Air Canada does report strong earnings and demonstrates a continued recovery, there’s still a lot of work to do for the company to recoup all the value that’s been lost in the last two and a half years.

Air Canada stock could feel the effects of the pandemic for years

Throughout the pandemic, as Air Canada’s operations nearly ground to a halt, the stock took on tonnes of debt while diluting shares. So, while the stock offers upside as it recovers, it could be years before it reaches its pre-pandemic price upwards of $50 a share.

At the end of 2019, just before the pandemic, Air Canada stock had a share price of $48.51, a market cap of $12.85 billion, and an enterprise value (EV) of $16.34 billion.

As of Friday’s close, its share price of $16.60 is down roughly 66%. However, its current market cap of $5.96 billion is down just 54%, which is more of an accurate value. The share price has fallen more than the market cap due to dilution.

The best measure of all is EV since it considers debt. And Air Canada raised more cash from debt than it did from diluting shares. Its EV as of Friday is $13.83 billion, down just 15% from where it was before the pandemic at the end of 2019.

Air canada stockWhile Air Canada’s share price has remained low, its enterprise value is near pre-pandemic levels.

This means that Air Canada stock is not as cheap as it looks, and it has a significant amount of debt that it will need to pay down for years. This is why it’s crucial for Air Canada stock to recover its operations as soon as possible.

The airliner’s revenue has been rising for five straight quarters

The positive news for Air Canada is that for five consecutive quarters, its revenue has been higher year-over-year. And in the third quarter, which Air Canada reports at the end of this month, analysts expect a 25% increase in revenue and more than 135% in growth year-over-year.

These numbers demonstrate that Air Canada stock is on the right track. Now that its business is recovering, investor interest is shifting toward profitability.

The stock is finally expected to be profitable for the first time since the pandemic

Profitability is crucial for any business, but it’s essential for Air Canada since it has so much debt to pay down. So, with the stock expected to earn positive earnings per share (EPS) this quarter, it couldn’t come at a better time. If Air Canada successfully reports positive EPS, it would end a streak of 10 straight quarters of negative EPS.

Plus, its earnings before interest, taxes, depreciation, and amortization (EBITDA) has been recovering lately and is expected to grow to over $800 million in the quarter. So come October 28, many investors will be watching closely to see how Air Canada stock has performed.

The average analyst target price for Air Canada stock is $25.46

With an average analyst target price of nearly $25.50, Air Canada stock potentially offers more than 50% upside. It’s clear that many analysts are paying more attention to its recovery potential and worrying less about its debt.

That’s bullish for investors today who are hoping for a rally. However, if market conditions worsen or Air Canada’s recovery faces more headwinds and uncertainty, this could negatively impact the stock again in the short run.

So, while there’s significant potential for returns as Air Canada’s operations recover, it’s still unclear at this time whether those potential rewards are worth the risk.

The post 5 Things to Know About Air Canada Stock appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Air Canada?

Before you consider Air Canada, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in September 2022 … and Air Canada wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 21 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks
* Returns as of 9/14/22

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Fool contributor Daniel Da Costa 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.

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