In this article, we will take a detailed look at the 10 best Canadian stocks to buy according to Wall Street analysts.
In the ever-evolving landscape of investment opportunities, keeping an eye on the broader economic environment can be as crucial as analyzing individual stocks. As we delve into the best Canadian stocks to buy, it’s important to consider the country’s current economic outlook. Canada’s economic environment reveals a complex mix of challenges and potential opportunities. The global economy is still reeling from historically high inflation, which has triggered the most aggressive monetary tightening in decades. While the U.S. economy has demonstrated an unexpected resilience, balancing robust growth with moderating inflation, Canada’s situation requires closer scrutiny. The Canadian economy, though strong in many respects, is particularly sensitive to interest rates. High levels of household debt and relatively short mortgage terms amplify the effects of rising interest rates, making Canadian consumers and businesses more vulnerable compared to their U.S. counterparts. Nevertheless, the latter part of 2023 showed unexpected economic strength, buoyed by record immigration and positive spillover from a resilient U.S. economy, leading to a significant easing of recession fears in Canada.
Yet, the Canadian economy is not entirely out of the woods. Growth is anticipated to remain below trend in 2024, with the Bank of Canada forecasting a modest GDP increase of 1.25% to 1.5%. This slowdown is partially attributed to Canada’s distinct economic vulnerabilities. For instance, productivity growth has been alarmingly weak, with Canada’s senior deputy governor labeling it as an “emergency”. This decline is largely due to insufficient business investment in key areas such as equipment and intellectual property, compounded by limited competition in essential sectors like telecommunications and banking. On a positive note, this slower growth is expected to ease inflationary pressures. Headline inflation has been gradually decreasing, and core inflation, which excludes volatile food and energy prices, is moving closer to the Bank of Canada’s target range. This scenario provides the Bank with some flexibility, with expectations for a 50-75 basis point reduction in interest rates later this year.
Despite strong job creation, particularly a notable surge in April 2024, employment growth of 2.0% over the past year has not kept pace with the 3.4% rise in population. This disparity has pushed the unemployment rate up by nearly a full percentage point to 6.2%, and it is projected to remain high through the rest of this year before beginning to decline in 2025. Wage growth, which averaged 5.3% in 2023, has decelerated to 3.9% (annualized) in the first quarter of 2024. With inflation pressures easing, this slower wage growth is expected to continue through 2024 and into the following year. Although the Bank of Canada’s decision to cut its policy rate is a step in the right direction, Canadian households remain the most indebted in the G7. The interest rate hikes since 2022 have strained household finances, resulting in a decline in real consumer spending per capita over five of the last seven quarters as more income is diverted towards servicing mortgage and loan interest payments.
The housing market has felt these effects more acutely. Real residential investment per capita dropped by 22.8% in the first quarter of 2024 compared to two years earlier. Looking forward, consumer spending and residential investment are expected to recover as lower interest rates stimulate demand. However, with low consumer confidence, hesitation to make significant purchases, ongoing housing affordability issues, and elevated savings rates, the pace of recovery in the latter half of 2024 is likely to be slow. Deloitte forecasts that more substantial improvements in consumption and residential investment will occur next year as confidence improves. Overall, Canada’s economy performed better in the first half of 2024 than expected, but this strength is projected to be counterbalanced by slower real GDP growth in the latter part of the year due to reduced household spending. The updated forecast anticipates real GDP growth of 1.2% for 2024, accelerating to 2.6% in 2025. On a per-capita basis, real GDP is expected to decline by 1.6% this year before rebounding to 1.1% growth in 2025.
For investors looking to capitalize on these evolving conditions, understanding the underlying economic indicators and trends is essential. With this context, we now turn to a detailed examination of the best Canadian stocks to buy according to Wall Street analysts.
A content recommendation platform in an office in Vancouver, Canada from the perspective of a user.
Our Methodology
For this article we first used a stock screener to identify Canadian stocks that analysts see material upside to, as of September 9. From this list we chose 10 stocks that have the highest upside potential from their current price based on average analyst price targets.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Canadian Stocks To Buy According to Wall Street Analysts
10. Cameco Corporation (NYSE:CCJ)
Upside Potential: 52%
Average Analyst Share Price Target: $57.02
Our list of ten best Canadian stocks to buy according to wall street analysts starts with Cameco Corporation (NYSE:CCJ). Cameco Corporation (NYSE:CCJ) offers an upside potential of 52%, with analysts setting an average share price target of $57.02. Cameco Corporation (NYSE:CCJ) remains a dominant force in the global nuclear energy sector, benefiting from increasing demand for clean, carbon-free power. In Q2 2024, the company highlighted its strong market position, driven by geopolitical tensions, the pressing need to replace fossil fuels, and growing energy demand due to rising global temperatures. Nuclear energy continues to gain traction as a reliable, long-term energy source, and Cameco Corporation (NYSE:CCJ) is well-positioned to take advantage of these tailwinds. Cameco Corporation (NYSE:CCJ) production at key operations such as MacArthur River, Key Lake, and Cigar Lake is fully committed, demonstrating its ability to secure long-term contracts in a tightening uranium market. Despite challenges, including operational disruptions and regulatory changes like Kazakhstan’s tax increase, Cameco’s premier tier-one assets provide a competitive edge. The company is also exploring expansion opportunities at its facilities to increase production in response to growing demand.
Financially, Cameco Corporation (NYSE:CCJ) remains strong with a focus on debt reduction and prudent liquidity management. The company repaid $100 million of its outstanding term loan and refinanced $500 million in senior unsecured debentures. With improving long-term contract prices and higher production capacity, Cameco is set to generate strong cash flow moving forward. The company’s recent acquisition of Westinghouse is expected to contribute significantly to its earnings, with projected adjusted EBITDA growth of 6% to 10% annually over the next five years. Despite short-term uncertainties affecting the broader market, Cameco Corporation (NYSE:CCJ) benefits from strong political support for nuclear energy globally, including bipartisan support in the U.S. As a result, Cameco is well-positioned to capitalize on the growing demand for nuclear energy, making it a compelling investment for those seeking exposure to the clean energy sector and the uranium market.
Aristotle Capital International Equity Strategy stated the following regarding Cameco Corporation (NYSE:CCJ) in its Q2 2024 investor letter:
“Cameco Corporation (NYSE:CCJ), one of the world’s largest publicly traded uranium producers, was the top contributor during the period. Support from governments and policymakers for nuclear energy has continued to increase in 2024 as countries realize it can play a crucial role in both promoting energy security and lowering dependence on fossil fuels to meet environmental goals. With higher demand for uranium across the world, Cameco’s production was up more than 25% year-over-year, and its long-term supply contracts have increased (annual commitments now standing at 28 million pounds per year through 2028). We view these fundamental improvements as further proof Cameco is making progress on our catalyst of increasing its uranium volume sold at higher prices, all while lowering production costs through scale and its access to some of the highest-grade ore on the planet. In addition, we believe the company’s continued integration of Westinghouse Electric Company’s market-leading downstream capabilities will allow it to offer a highly competitive nuclear fuel solution. In our opinion, this puts Cameco on track to enjoy higher levels of FREE cash flow and the ability to de-risk its balance sheet as it meets global energy needs.”
09. ATS Corporation (NYSE:ATS)
Upside Potential: 53%
Average Analyst Share Price Target: $38.91
ATS Corporation (NYSE:ATS) stands at number nine on our list of ten best Canadian stocks to buy according to wall street analysts. ATS Corporation (NYSE:ATS) has an upside potential of 53%, with analysts assigning an average share price target of $38.91. ATS Corporation (NYSE:ATS) is a leading provider of automation solutions, serving a diverse range of industries, including life sciences, consumer products, energy, transportation, and more. In Q1 2025, the company posted impressive order bookings of $817 million, up 18% year-over-year, driven by robust demand in the life sciences and consumer products sectors. However, revenue for the quarter was $694 million, a 7.9% decline from the previous year due to expected slowdowns in transportation and food industries. Despite the revenue decline, ATS Corporation (NYSE:ATS) is well-positioned for future growth, boasting a substantial order backlog of $1.9 billion, including a record $990 million in life sciences. This segment is seeing strong demand, particularly for products like wearable devices, GLP-1 auto-injectors, and radioisotope production lines. Additionally, ATS Corporation (NYSE:ATS) recent acquisition of Paxiom, a leader in packaging solutions, strengthens its footprint in the food and beverage sector, allowing the company to offer comprehensive packaging and end-of-line automation solutions.
ATS Corporation (NYSE:ATS) is also capitalizing on opportunities in the energy market, with a focus on nuclear reactor refurbishment and emerging small modular reactor (SMR) projects. This expertise positions ATS Corporation (NYSE:ATS) to benefit from the global push towards cleaner energy solutions. The company’s digital offerings, including its AI-driven predictive maintenance tools, provide customers with real-time monitoring and performance insights, adding value to its long-term service contracts. ATS Corporation (NYSE:ATS) has a solid strategy to drive margin expansion through disciplined cost management and efficiency improvements. Gross margins improved in Q1, supported by the company’s focus on continuous improvement and operational excellence. With strong demand in high-growth sectors, strategic acquisitions, and a focus on digital innovation, ATS Corporation (NYSE:ATS) is poised for long-term success, making it an attractive investment opportunity based on its strong fundamentals.
