3 TSX Stocks to Buy Following This Week’s Canadian Election

As I’m writing this, Canadians are heading to the polls in what should be one of the most consequential elections in some time for our neighbor to the north. The Canadian economy has been firing on only a few cylinders in recent quarters, and that was before tariffs took effect. Indeed, in terms of trading nations that may be most impacted (outside of China) by Trump’s tariff policies, the 25% tariffs on goods and services (ex-energy) from Canada still stand as a key headwind investors are pricing into their financial models for Canada-based companies.

The thing is, not all Canadian companies are created equal. And given the headwinds that have largely been baked into valuations, there’s a very good argument to consider TSX-listed companies as potential value opportunities. That goes double when investors consider the multiples many top U.S. growth stocks trade at right now.

So, without further ado, let’s dive into three top TSX stocks I think are worth considering right now. 

Shopify

Let’s start with a name many investors may already be well aware of. Shopify (NASDAQ:SHOP) is a top e-commerce platform provider which provides a plethora of tools and capabilities for businesses of all sizes to set up online shops. For those looking to sell their wares online, outside of giants such as Amazon (NASDAQ:AMZN), the options remain relatively limited. Shopify’s platform allows such businesses to set up an online presence and truly go direct to the consumer, with much lower fees and more autonomy on how a given company chooses to deal with its end customers. 

As one might expect, Shopify’s business soared during the pandemic, with retailers forced to seek out independent platforms to grow and expand their online footprint. And while other competing platforms like Wix, Squarespace and Godaddy provide similar offerings, Shopify’s highly-integrated model and plethora of omnichannel services have become the gold standard for many top retailers looking to expand their business in the most efficient way possible.

Shopify’s focus on providing one of the most cost effective and scalable options for retailers has propelled the company to incredible top and bottom line growth rates in past years. And while these growth rates have slowed following the pandemic, the company’s 28% market share in terms of all U.S. e-commerce transactions stands out as a key reason to own this company for the long-term. That is, for those bullish on the future growth prospects of this sector in the decades to come. 

Restaurant Brands

Another company I’ve long felt has been overshadowed by other top fast food giants in the U.S. (but is one worth considering) is Restaurant Brands (NYSE:QSR). The parent company of Burger King, Tim Horton’s (a Canadian favorite), Popeye’s and Firehouse Subs (among other banners), Restaurant Brands has a global footprint and one that investors would be remiss to ignore.

This Canada-based company (formed after the initial merger of Tim Horton’s and Burger King) has seen strong growth in recent years due mostly to the company’s focus on growing its footprint in other fast-growing global markets. With a price-earnings ratio under 20-times and strong cash flow growth seen in recent years, a strong argument can be made that Restaurant Brands is a very attractive option for investors bullish on this space, particularly in comparison to other giants such as McDonald’s (NYSE:MCD) in this sector. 

I think Restaurant Brands’ focus on diversification, the company’s relative valuation discount, and its focus on growing in higher-growth markets around the world position this stock as a long-term winner. Personally, QSR stock is my preferential way to play this sector, for those looking for defensive options to battle ongoing uncertainty in the markets. 

Suncor

For investors looking for exposure to energy stocks, Canada has plenty of options to consider. Most of the Canada-based companies operating in the country’s immense resources sector produce heavy oil courtesy of Alberta’s vast oil sands region. This oil is shipped primarily to Midwestern refiners, who turn this crude into gasoline and other byproducts which are used domestically, and also shipped back to Canada. 

Suncor (NYSE:SU) is a top player in this regard. The heavy oil producer is among the energy majors with one of the more attractive valuations at present, with shares of SU stock currently changing hands at a price-earnings ratio of just 10.5-times. And with a dividend yield of 4.5%, this stock’s total return upside potential remains strong, particularly for those looking for energy companies with some of the best balance sheets in this space.

Now, there are certainly headwinds that could disrupt Suncor’s price appreciation potential over time. If tariffs become more widespread, refineries retool to focus on more domestically-produced oil, or the discount for Western Canadian Select increases relative to WTI (key benchmarks for crude oil), Suncor’s stock price could take a hit.

But in my view, most of these potential headwinds are already more than priced in at current levels. Taking a page out of Warren Buffett’s playbook and focusing in on some of the high cash flow yields in this space could turn out to be a very profitable long-term exercise. That’s my view right now, at least. 

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