13 Best Canadian Stocks to Buy and Hold

Published on October 31, 2023 at 2:58 am by Fahad Saleem in Hedge Funds, News

In this article, we will take a look at the 13 best Canadian stocks to buy and hold. To see more such companies, go directly to 5 Best Canadian Stocks to Buy and Hold.

The Canadian economy is also facing the heat of inflation and rising interest rates. Analysts are divided when it comes to the probability of recession hitting the country in 2023 or 2024. Bloomberg conducted a survey of economists in October and found out that most economists believe Canada will be able to avoid a recession but rising interest rates will hamper the country’s economic growth. Gross domestic product is expected to be flat in the fourth quarter and will grow at an annualized pace of just 0.3% in the first quarter of next year. The economists surveyed by Bloomberg expect that the Canadian central bank could begin to cut interest rates in the second quarter of 2024, but that pace of those cuts will be slow. Analysts expect inflation to be at 3.3% in the first quarter of 2024 and then cool down to 2.1% in the second half of 2024.

Latest data in Canada shows that consumers are starting to taper off their spending, which could cause slowing economic growth and joblessness in the coming days. Amid this backdrop Canada’s central bank kept its interest rates unchanged in its later October meeting. Bank of Canada’s governor Tiff Macklem, however, said in a news conference that the chances of soft landing are declining:

“We’ve been saying for some time that the path to a soft landing is narrow. And in this projection, that path has gotten narrower. It is a path where the economy goes through a period of very weak growth, and then comes out of that in late ’24 and through ’25.”

For this article we scanned Insider Monkey’s database of 910 hedge funds and picked 13 Canadian stocks with the highest number of hedge fund investors.

A close-up of a stock market display monitor with a graph showing a sharp increase in value.

Best Canadian Stocks to Buy and Hold

13. Suncor Energy Inc. (NYSE:SU)

Number of Hedge Fund Holders: 20

Canadian energy company Suncor Energy Inc. (NYSE:SU) shares have gained about 8% year to date through October 26. Suncor Energy Inc. (NYSE:SU) is in the news after the company said it would buy TotalEnergies’ (NYSE:TTE) Canadian operations for about C$1.47 billion.

Suncor Energy Inc. (NYSE:SU)’s CEO Rich Kruger has been explaining his comments he made during the company’s Q2 earnings call to Canadian lawmakers. The comments were about climate change goals. Here’s what he’d said that invited the ire of the Canadian government:

“The lack of emphasis on today’s business drivers, and while important, we have a bit of a disproportionate emphasis on the longer term energy transition. Today, we win by creating value through our large integrated asset base underpinned by oil sands. Discussions have occurred with our Board of Directors, who are supportive of our revised direction in tone. And I would just leave this with more to come but you can expect a sharper, clearer, more tangible articulation of how Suncor plans to win. In addition to the above, we encountered…[Read the complete earning call transcript here.]”

Artisan International Value Fund made the following comment about Suncor Energy Inc. (NYSE:SU) in its Q4 2022 investor letter:

“Suncor Energy Inc. (NYSE:SU), a Canada-based operator of oil sands mines, refineries and retail gas stations, was the third-largest contributor to return for the year, mainly due to higher oil prices. The share price increased by one third. Notably, the portfolio generated significant returns from energy stocks, including Suncor, Tenaris, Imperial Oil and tangentially Alimentation Couche-Tarde and Seven & i Holdings, both of which are in the gas station business. Given the cyclicality and commodity nature of the oil business, we have sold shares of these investments, including the complete sale of both Tenaris and Imperial Oil.”

12. Cenovus Energy Inc. (NYSE:CVE)

Number of Hedge Fund Holders: 35

Canadian oil and gas company Cenovus Energy Inc. (NYSE:CVE) ranks 12th in our list of the best Canadian stocks to buy and hold. Of the 910 hedge funds in Insider Monkey’s database, 35 hedge funds reported owning stakes in Cenovus Energy Inc. (NYSE:CVE). The biggest hedge fund stakeholder of Cenovus Energy Inc. (NYSE:CVE) was John Armitage’s Egerton Capital Limited which had a $262 million stake in the company.

In September Cenovus Energy Inc. (NYSE:CVE) announced early tender results for its tender offers to purchase for cash certain of its outstanding series of Notes.

L1 Long Short Fund made the following comment about Cenovus Energy Inc. (NYSE:CVE) in its Q1 2023 investor letter:

“The broad-based market sell-off in mid-March from the banking crisis allowed us the opportunity to add to several of our high conviction long positions at exceptional prices, including:

Cenovus Energy Inc. (NYSE:CVE): Shares fell by ~17% intra month, with the WTI oil price falling to US$66/bbl. We continue to remain positive on the outlook for Energy. Supply remains constrained with reduced capital investment and sustained declines in global inventories. Demand may see some negative impacts from a potential recession; however, we expect this to be mitigated by the likely recovery of Chinese consumption over the coming year.

Cenovus (Long -10%) shares declined due to WTI oil prices falling ~6% and refinery outages over the quarter. The banking crisis led to a collapse in oil prices to ~US$66/bbl in mid-March. We used the dislocation to add to our high conviction energy names, including Cenovus. Oil prices subsequently recovered to end the quarter at around US$75/bbl and have rallied further post the quarter end with OPEC+ announcing output cuts of 1.16 million barrels per day in early April. Cenovus continues to generate very strong free cash flow at current oil price levels, with the long-life nature of its oil sands assets and its low cost of production providing a break-even oil price at around ~US$40/bbl.”

11. Canadian Natural Resources Limited (NYSE:CNQ)

Number of Hedge Fund Holders: 36

Canadian Natural Resources Limited (NYSE:CNQ) is a high dividend yield stock in our list of the best Canadian stocks to buy and hold according to hedge funds. Canadian Natural Resources Limited (NYSE:CNQ)’s dividend yield stands at over 4% as of October 26. RBC analyst Greg Pardy recently said that Canadian Natural Resources Limited (NYSE:CNQ) was his favorite Canadian oil company, due to shareholder returns and long-life, low-decline portfolio.

Out of the 910 hedge funds in Insider Monkey’s database, 36 hedge funds reported owning positions in Canadian Natural Resources Limited (NYSE:CNQ) as of the end of the second quarter of 2023. The biggest stake in Canadian Natural Resources Limited (NYSE:CNQ) belongs to Donald Yacktman’s Yacktman Asset Management which had an $850 million stake in the company.

Moon Capital Management made the following comment about Canadian Natural Resources Limited (NYSE:CNQ) in its second quarter 2023 investor letter:

“Canadian Natural Resources Limited (NYSE:CNQ): For several reasons, we have always viewed the oil and gas industry with an especially skeptical eye. Commodity businesses are difficult to forecast, and the industry has long been plagued by poor incentive structures and principal-agent issues. The managements of many of the smaller companies in the industry are notable for seldom being burdened with an abundance of ethics. Further, the entire industry has historically been dominated by a “drill at all costs” mentality, with little regard to returns on capital. That is, until recently, as social concerns have helped propel both a sell-off in oil and gas company stock prices and a massive reduction in capital expenditures. The lack of capital expenditures has created a favorable environment for higher commodity prices. As a result, we are beginning to see the sector as a more appealing hunting ground.

The move from fossil fuels may be inevitable, but it is in no way imminent, regardless of the political or social pressures demanding otherwise. While renewable energy sources will continue to take “market share” from fossil fuels, even the most ardent renewables supporters acknowledge that oil and gas will continue to be needed for at least the next 30 years to bridge the gap to even the most optimistic projections of a complete shift to renewables.

We recently purchased shares of Canadian Natural Resources (CNQ), a diversified energy company that specializes in the acquisition, exploration, development, production, and sale of crude oil and natural gas. We consider CNQ to be one of the few companies in the industry that never needed to undergo either a capital allocation or ethical transformation. The company has long nurtured a culture of continuous improvement, emphasizing cost control to drive strong operational and financial results while working to maximize shareholder value…”

10. Bausch Health Companies Inc. (NYSE:BHC)

Number of Hedge Fund Holders: 37

Canadian pharmaceutical company Bausch Health Companies Inc. (NYSE:BHC) is one of the best Canadian stocks to buy and hold for the long term according to hedge funds. Earlier this month Bausch Health Companies Inc. (NYSE:BHC) received FDA approval for its triple-combination topical medication Cabtreo for the treatment of acne vulgaris.

According to Insider Monkey’s database of 910 hedge funds, 37 hedge funds had stakes in Bausch Health Companies Inc. (NYSE:BHC). The biggest stakeholder of Bausch Health Companies Inc. (NYSE:BHC) was John Paulson’s Paulson & Co which had a $212 million stake in the company.

Here is what Miller Value Partners Opportunity Trust Fund has to say about Bausch Health Companies Inc. (NYSE:BHC) in its Q2 2022 investor letter:

“Bausch Health Companies Inc. (NYSE:BHC) declined during the quarter as the company consummated its Bausch+Lomb IPO at valuations far below expectations, reported disappointing Q1 2022 results, and delayed its plan to spin out its Solta (aesthetics) business due to difficult market conditions. While the company spun off 10% of Bausch+Lomb (BCLO) they retained 90% of the company which they intend to distribute once they have met their target leverage ratio of 6.5-6.7x. The future spin-off value of the Bausch+Lomb piece represents a value of $12.55 per share, 39% above where Bausch Health is currently trading. The company recently appointed John Paulsen as Chair of the Board, which should accelerate value realization.”

9. Canadian National Railway Company (NYSE:CNI)

Number of Hedge Fund Holders: 38

Canadian National Railway Company (NYSE:CNI) earlier this month posted third quarter results. Adjusted EPS in the period came in at C$1.69. Revenue fell 12% year over year to C$4.0 billion. Operating income in the period totaled C$1,517 million.

Insider Monkey’s database of 910 hedge funds shows that 38 hedge funds had stakes in Canadian National Railway Company (NYSE:CNI) as of the end of the second quarter of 2023. The most significant stakeholder of Canadian National Railway Company (NYSE:CNI) was owned by Michael Larson’s Bill & Melinda Gates Foundation Trust which had a whopping $6.6 billion stake in the company.

Canadian National Railway Company (NYSE:CNI)’s management talked about future outlook and expectations in its latest earnings call and said:

We’re seeing lots of momentum across almost all of our markets. With bulk leading the charge, Canadian grain is running full out. U.S. Green will also be strong and similar to 2022, benefiting from record low water levels on the Mississippi and limited barge capacity, but tempered by demand in China. We expect solid potash demand in line with the Q3 run rate, and there could be additional upside with our robust export market. Canadian met coal should be strong for the rest of the year, and we have set an annual export record already with one of our largest customers.

For overseas intermodal, we are seeing clear indicators of positive trends. Destocking appears to be nearing an end but wholesale inventory to sales ratios remain elevated. We are forecasting a gradual improvement throughout 2024. On the domestic side, both retail and wholesale are tracking favorably over last year. As Tracy said, domestic is also held by some growth initiatives. Rounding out with merchandise, we have a strong outlook for drilling with frac sand demand, aided by our network capacity enhancement in Northern BC. We expect automotive to … [read the full earnings call transcript here]”

8. Waste Connections, Inc. (NYSE:WCN)

Number of Hedge Fund Holders: 41

Waste Management company Waste Connections, Inc. (NYSE:WCN) shares have gained about 4% year to date through October 26. Waste Connections, Inc. (NYSE:WCN) recently beat Q3 estimates and also upped its dividend by a whopping 11.8%.

Waste Connections, Inc. (NYSE:WCN) is a popular stock among hedge funds as smart money investors pile into ESG stocks for the long term. A total of 41 hedge funds reported owning stakes in Waste Connections, Inc. (NYSE:WCN) as of the end of the second quarter of 2023. The biggest stakeholder of Waste Connections, Inc. (NYSE:WCN) was Henry Ellenbogen’s Durable Capital Partners which had a $315 million stake in the company.

TimesSquare Capital made the following comment about Waste Connections, Inc. (NYSE:WCN) in its Q3 2022 investor letter:

“Waste Connections, Inc. (NYSE:WCN) provides non-hazardous waste collection, transfer, and resource recovery services in the U.S. and Canada. Their shares rose 9% after topping second quarter estimates and raising forward guidance. This was driven by better-than-expected solid waste pricing and robust growth in the E&P waste business for oil exploration companies.”

7. Xenon Pharmaceuticals Inc. (NASDAQ:XENE)

Number of Hedge Fund Holders: 41

Xenon Pharmaceuticals Inc. (NASDAQ:XENE) Inc. is a Canadian biopharmaceutical company that makes treatments for neurological disorders.

In August, during its Q2 earnings call, Xenon Pharmaceuticals Inc. (NASDAQ:XENE) updated investors and analysts about its trials and new drugs:

“All Phase3 epilepsy clinical trials are actively recruiting patients, including X-TOLE2and X-TOLE3 in patients with focal-onset seizures or FOS, and exact in patients with primary generalized tonic-clonic seizures or PG TCS. As noted on our last call, we continue to maintain a high degree of confidence in our ability to execute on our XEN1101 Phase3 epilepsy clinical development plans. We have the advantage of being able to draw upon our experience with our X-TOLE Phase2b study, which was similar in size and design to both X-TOLE2 and X-TOLE3, and the established strong relationships with key investigators who are already familiar with XEN1101. We expect to provide guidance later this year regarding our estimated timing of study completions.

In addition to our ongoing Phase3 epilepsy program in adults, we also continue to execute on our strategy for the pediatric development plan for XEN1101 based in part on feedback from FDA. “

Read the full earnings call transcript here.

As of the end of the second quarter of 2023, 41 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Xenon Pharmaceuticals Inc. (NASDAQ:XENE). The biggest stakeholder of Xenon Pharmaceuticals Inc. (NASDAQ:XENE) was Kurt Von Emster’s VenBio Select Advisor which had a $189 million stake in the company.

6. Agnico Eagle Mines Limited (NYSE:AEM)

Number of Hedge Fund Holders: 42

Canadian gold company Agnico Eagle Mines Limited (NYSE:AEM) stock has gained about 8% over the past 12 months. Agnico Eagle Mines Limited (NYSE:AEM) recently posted Q3 results. Adjusted EPS in the period came in at $0.44 surpassing estimates by $0.02. Revenue in the period jumped 13.1% year over year to $1.64 billion, meeting estimates.

Out of the 910 hedge funds tracked by Insider Monkey, 42 hedge funds had stakes in Agnico Eagle Mines Limited (NYSE:AEM). The biggest stakeholder of Agnico Eagle Mines Limited (NYSE:AEM) during this period was Jean-Marie Eveillard’s First Eagle Investment Management which owns a $313 million stake in the company.

Old West Management made the following comment about Agnico Eagle Mines Limited (NYSE:AEM) in its Q4 2022 investor letter:

“Agnico Eagle Mines Limited (NYSE:AEM) is the third largest gold miner in the world with mines in Canada, Australia, Finland, and Mexico. Although we have long respected the company, we became shareholders when they acquired our portfolio holding, Kirkland Lake Gold. Agnico chairman Sean Boyd is one of the most respected executives in the mining industry. He was appointed CEO in 1998 and was recently appointed Executive Chairman. Boyd is a large shareholder and perfectly fits our owner/manager role. This year the company is projected to make nearly $1 billion in net income on $5.8 billion in revenue with $758 million of free cash flow. Net income has been growing 15% per year for several years. Agnico has a fortress balance sheet with $1.3 billion of long term debt, which is only 2 times EBITDA, and $820 million cash in the bank. The stock trades at $55 per share, which is 26 times earnings with a 2.9% dividend yield.”

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