In this article, we will take a look at the 10 Best Canadian Stocks to Buy. To skip our analysis of the iShares MSCI Canada ETF, its performance, and weighting of the components, you can go directly to see the 5 Best Canadian Stocks to Buy.
An Exchange Traded Fund (ETF) is a type of pooled investment vehicles that holds multiple underlying assets including stocks, commodities, or bonds, and provides access to a larger basket of securities with low expense ratios and broker commissions. As the name suggests, ETFs are traded on a stock exchange and can be bought and sold similar to any other stocks traded on the exchange. Passively managed ETFs generally track an underlying index to replicate its performance, such as the SPDR Dow Jones Industrial Average ETF Trust which tracks the Dow Jones Industrial Average index, and SPDR S&P 500 ETF which tracks the S&P 500 index.
The iShares MSCI Canada ETF, traded on NYSE Arca exchange, seeks to track the investment results of MSCI Canada Custom Capped Index, an index composed of Canadian equities. The Index is designed to measure the equity performance of Canadian publicly listed companies and comprises of 88 large and midsized companies based in Canada. As of June 30, 2022, the ETF had an annualized total return of 7.02% over the course of last 5 years, and 7.80% since inception in 1996.
As of August 31, 2022, the portfolio was heavily concentrated with stocks from the Financials sector, accounting for a cumulative 36.46% weightage, followed by Energy at 19.67%, and Industrials at 11.85%.
Global markets have been going through a rough patch with fears of an upcoming recession due to inflation and aggressive monetary policies implemented by central banks. If economic data doesn’t meet expectations, global markets and stock prices could fall further. Canada’s equity sector, heavily weighted with energy and minerals companies, has fared comparatively better due to strength in commodity markets. If commodity prices decline, the stock prices of many commodity producers could decline. If commodity prices rise, however, Canadian stocks could do well.
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Methodology
For our list, we took the top 25 stocks by portfolio weight of the iShares MSCI Canada ETF as of September 19 that were listed on either the NYSE or NASDAQ and we sorted them based on the number of hedge funds in our database which held shares in the same stock as of Q2 2022. Of those, we took the top 10.
10 Best Canadian Stocks to Buy
10. Agnico Eagle Mines Limited (NYSE:AEM)
Percentage of iShares MSCI Canada ETF: 1.06%
Number of Hedge Fund Holders: 31
Agnico Eagle Mines Limited (NYSE:AEM) is a gold mining company based in Toronto, Ontario. With a history dating back to 1957, Agnico Eagle Mines Limited (NYSE:AEM) operates mines in Canada, Australia, Finland, and Mexico. It also has a pipeline of high-quality exploration and development projects in these countries as well as in the United States and Colombia.
In July, the board of directors of Agnico Eagle Mines Limited (NYSE:AEM) declared a quarterly cash dividend of $0.40 per share. The mining company has declared cash dividends every year since 1983. Earlier in September, Goldman Sachs analyst Emily Chieng initiated coverage of Agnico Eagle Mines Limited (NYSE:AEM) shares with a price target of C$72 per share and a ‘Buy’ rating.
As of Q2 2022, 31 out of the 895 hedge funds tracked by Insider Monkey were bullish on Agnico Eagle Mines Limited (NYSE:AEM) and held its shares valued at $1.4 billion. GQG Partners was the largest shareholder holding 17.5 million shares valued at $798 million.
Alongside Suncor Energy Inc. (NYSE:SU), Nutrien Ltd. (NYSE:NTR), and Shopify Inc. (NYSE:SHOP), Agnico Eagle Mines Limited (NYSE:AEM) is a Canadian stock that’s widely held by many hedge funds in our database at the end of Q2 2022.
9. Canadian Natural Resources Limited (NYSE:CNQ)
Percentage of iShares MSCI Canada ETF: 3.57%
Number of Hedge Fund Holders: 33
Calgary, Alberta-based Canadian Natural Resources Limited (NYSE:CNQ) is one of the largest independent crude oil and natural gas producers in the world, focused on natural gas, light oil, heavy oil, in situ oil sands production and oil sands mining
In August, Canadian Natural Resources Limited (NYSE:CNQ) released the financial results for Q2 2022. Its revenue increased by 69% y-o-y to $8.9 billion, while its net income surged by 117% y-o-y to $2.7 billion, for the three months ended June 30, 2022. It reported a normalized EPS of $2.54 for the quarter, beating the consensus by $0.21.
Canadian Natural Resources Limited (NYSE:CNQ) declared a regular quarterly cash dividend of C$0.75 per share, and a special dividend of C$1.50 per share.
As of Q2 2022, 33 hedge funds out of the 895 hedge funds tracked by Insider Monkey held shares of Canadian Natural Resources Limited (NYSE:CNQ), valued at $2.3 billion. Its largest shareholder was Yacktman Asset Management with ownership of 16.9 million shares valued at $907 million.
8. Brookfield Asset Management Inc. (NYSE:BAM)
Percentage of iShares MSCI Canada ETF: 3.82%
Number of Hedge Fund Holders: 34
Brookfield Asset Management Inc. (NYSE:BAM) is a leading global alternative asset manager with approximately $750 billion of assets under management across real estate, infrastructure, renewable power and transition, private equity, and credit.
In June, Brookfield Asset Management Inc. (NYSE:BAM) announced that it had reached the final close for its inaugural Brookfield Global Transition Fund with $15 billion total capital raised. The fund is dedicated to facilitating the global transition to a net-zero carbon economy.
As of Q2 2022, 34 of the 895 hedge funds tracked by Insider Monkey owned shares of Brookfield Asset Management Inc. (NYSE:BAM), valued at $1.8 billion. Its largest shareholder was Charles Akre’s Akre Capital Management with ownership of 13.3 million shares valued at $592 million.
7. Barrick Gold Corporation (NYSE:GOLD)
Percentage of iShares MSCI Canada ETF: 1.49%
Number of Hedge Fund Holders: 40
Barrick Gold Corporation (NYSE:GOLD), based in Toronto, Ontario, is a sector-leading gold and copper producer, operating mines, and projects in 18 countries in North and South America, Africa, Papua New Guinea, and Saudi Arabia.
In August, Barrick Gold Corporation (NYSE:GOLD) released its financial results for the quarter ended June 30, 2022. Its total revenue declined by 1% y-o-y to $2.9 billion, while its net income increased by 3% y-o-y to $717 million, for the three months. The normalized EPS was recorded at $0.24 for the quarter, beating the consensus by $0.02, and declared a quarterly cash dividend of $0.20 per share.
On September 12, Goldman Sachs analyst Emily Chieng initiated coverage of Barrick Gold Corporation (NYSE:GOLD) with a price target of $18 per share and a ‘Neutral’ rating.
As of Q2 2022, 40 of the 895 hedge funds tracked by Insider Monkey were long Barrick Gold Corporation (NYSE:GOLD), holding shares worth $1.1 billion. Its largest hedge fund shareholder is First Eagle Investment Management with ownership of 26.6 million shares valued at $471 million.
6. Canadian National Railway Company (NYSE:CNI)
Percentage of iShares MSCI Canada ETF: 3.94%
Number of Hedge Fund Holders: 41
Montreal, Quebec-based Canadian National Railway Company (NYSE:CNI) is a North American transportation and logistics leader offering integrated shipping solutions, including rail, intermodal, trucking, freight forwarding, warehousing and distribution. Its rail network comprises nearly 20,000 route-miles of track connecting three coasts: the Atlantic, the Pacific and the Gulf of Mexico.
On September 12, BofA analyst Ken Hoexter upgraded Canadian National Railway Company (NYSE:CNI) to ‘Buy’ rating from ‘Neutral’ and increased the price target on its shares to $135 from $128 as “hiring rebounds and that volumes have inflected positively.”
As of Q2 2022, 41 of the 895 hedge funds tracked by Insider Monkey owned shares of Canadian National Railway Company (NYSE:CNI), valued at $7.5 billion. Chris Hohn’s TCI Fund Management is its largest shareholder with ownership of 36.7 million shares valued at $4.1 billion.
Like Canadian National Railway Company (NYSE:CNI), Suncor Energy Inc. (NYSE:SU), Nutrien Ltd. (NYSE:NTR), and Shopify Inc. (NYSE:SHOP) are Canadian stocks that are held by many hedge funds in our database as of Q2 2022.
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Disclosure: None. 10 Best Canadian Stocks to Buy is originally published on Insider Monkey.
