10 Best Canadian ETFs to Buy

1. iShares S&P/TSX Capped Information Technology Index ETF (TSX:XIT)

5-year Share Price Performance as of December 9, 2024: 152.92%

The iShares S&P/TSX Capped Information Technology Index ETF (TSX:XIT) offers investors exposure to leading Canadian IT companies through an index-driven strategy. Ideal for those seeking to capitalize on the growth of Canada’s technology sector, the ETF has delivered a year-to-date return of 42.24%, reflecting steady performance. While the fund’s price-to-earnings ratio stands at a high 65.97, this is typical for tech-focused funds with significant growth prospects.

One of its notable holdings, Celestica Inc. (NYSE:CLS), an American-Canadian multinational electronics manufacturing services company, holds the fourth-largest position in the ETF with an 8.05% weighting. In Q3 2024, Celestica Inc. (NYSE:CLS) reported a revenue surge of 22% year-over-year, reaching $2.50 billion. Its gross profit increased by 25% to $259.1 million, driven by higher revenues and operational efficiencies, while diluted earnings per share rose 15% to $0.77.

Stifel remains optimistic about Celestica’s outlook, raising its price target to $100 from $70 and maintaining a Buy rating on December 10. The firm attributes its confidence to strong growth driven by demand from hyperscale clients, who contribute around 40% of Celestica’s revenues, and a recovery in industrial markets. Stifel projects Celestica’s earnings per share to range between $5.50 and $5.60, excluding potential benefits from mergers, acquisitions, or significant share repurchase activities.

While we acknowledge the potential of CLS, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CLS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

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