RBC's Top Picks: Canadian Stocks Set to Outperform in the Next 12 Months
RBC's Conviction List and Strong Performance
Royal Bank of Canada (RBC) has identified a selection of stocks expected to "materially outperform" in the coming year. These picks span various sectors, including health, software, and more, and are featured on RBC's small-cap conviction list. According to RBC's research note dated August 17, the stocks on their list have seen an average return of 7.3% between June 30 and August 15, surpassing the S&P Toronto Stock Exchange Small Cap Index by 5 percentage points.
Strategic Picks and Growth Opportunities
RBC has chosen Canada's largest vitamin supplement company, Jamieson Wellness, due to its projected strong growth in 2023 and expansion plans in the United States and China. Dental practice group Dentalcorp is also on the list, with RBC highlighting its "significant whitespace opportunity." The stock is currently trading at a discount compared to its U.S. and Canadian counterparts, according to the bank.
Outperforming Stocks and Acquisition Strategies
Enghouse Systems and OpSens
RBC rates call center software company Enghouse Systems as an outperform stock, partly due to its acquisition of video conferencing firm Lifesize. The bank anticipates a 15% increase in earnings per share (EPS) as a result. RBC also identifies fiber optic sensor manufacturer OpSens as a promising pick, particularly for its product SavvyWire, which is used in cardiology procedures. RBC sees this as a "significant opportunity."
Interfor and Cargojet
Lumber producer Interfor makes RBC's conviction list due to its compelling valuation. The analysts note that Interfor is trading at low levels on key valuation metrics and expect U.S. lumber prices to rise significantly in the next one to three years. Ontario-based airline Cargojet is also featured, with RBC highlighting its sustainable margin upside. While uncertain about the timing of increased cargo volumes, RBC views growing demand as a catalyst for the company's revenue growth.
Endorsements and Market Opportunities
Copperleaf Technologies and Doman
RBC selects data company Copperleaf Technologies for its recent endorsement by software firm SAP, which is expected to boost sales. The bank believes that Copperleaf's valuation does not reflect its potential in terms of a loyal customer base, untapped market opportunities, and attractive unit economics and growth profile. Building materials group Doman is also on RBC's conviction list, as the company's management anticipates that trends such as aging housing supply and work-from-home will offset the impact of heightened interest rates.
In conclusion, RBC's selection of Canadian stocks expected to outperform in the next 12 months showcases their strategic analysis and market insights. These picks span various sectors and highlight growth opportunities, acquisitions, compelling valuations, and endorsements. As investors consider RBC's conviction list, they may find valuable investment prospects in these companies.
Implications for New Businesses
RBC's selection of Canadian stocks expected to outperform in the next year provides valuable insights for new businesses.
Strategic Planning and Market Analysis
RBC's conviction list showcases the importance of strategic planning and thorough market analysis. New businesses can learn from RBC's approach by identifying growth opportunities within their industry and making strategic decisions based on market trends and forecasts.
Investment Opportunities and Business Growth
RBC's selection also highlights potential investment opportunities for new businesses. By understanding which sectors are expected to outperform, new businesses can make informed decisions about where to invest their resources for maximum return.
In conclusion, RBC's selection of Canadian stocks expected to outperform in the next 12 months offers valuable insights for new businesses. By understanding the strategic planning and market analysis that goes into creating such a list, new businesses can make informed decisions about their own growth strategies and investment opportunities. Furthermore, by keeping an eye on the sectors expected to outperform, new businesses can stay ahead of market trends and position themselves for success.