6 TSX stocks to watch as Canada’s GDP climbs 0.1% in June

September 01, 2022 07:35 AM EDT | By Kajal Jain
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  • Canada’s GDP reportedly spiked by 0.1 per cent in June this year helped the client-facing industries
  • The accommodation and food service in Canada jumped by 0.8 per cent in June
  • The transportation and warehousing sector also jumped by 0.1 per cent this month

Canadians looking to invest in the stock market could explore sector-specific stocks after the Statistics Canada report on the Gross Domestic Product (GDP) for June was released on Wednesday, August 31. Investors could look at the performances of stocks like Restaurant Brands (TSX: QSR), MTY Food (TSX: MTY), Transat AT (TSX: TRZ) and Mullen Group (TSX: MTL).

Canada’s GDP spiked by 0.1 per cent in June this year, helped by client-facing industries, which benefitted as the data agency stated that the Canadian government lifted COVID-19 mandates and border restrictions on June 20. The accommodation and food service increased by 0.8 per cent, driven by increased overseas and US visitors in Canada this month.

The transportation and warehousing sector also jumped by 0.1 per cent in June. Further, the entertainment and recreation sector increased by 1.8 per cent in June, which could draw attention to stocks like Corus (TSX: CJR.B).

Keeping these GDP figures in mind, Kalkine Media® has picked the following seven TSX-listed stocks that one can explore right now.

1.     Restaurant Brands International Inc (TSX: QSR)

Restaurant Brands is said to have made significant progress across its food service business in Q2 2022, with a nine per cent growth in comparable consolidated sales and a double-digit surge of 14 per cent in global system-wide sales on a year-over-year (YoY) basis.

The quick-food service provider posted total revenues of US$ 1.63 billion in the second quarter this year, higher than US$ 1.43 billion in the last year’s second quarter. The large-cap restaurant company announced a quarterly dividend of US$ 0.54 on October 5 despite a reduced net profit of US$ 346 million in Q2 2022 (compared to US$ 391 million in Q2 2021).

Restaurant Brands stock shot up by about 20 per cent quarter-to-date (QTD). As per Refinitiv data, the QSR stock recorded a Relative Strength Index (RSI) value of 64.13 (near the bullish level of 70) on August 31.

2.     MTY Food Group Inc (TSX: MTY)

MTY Food reported system sales of C$ 1.05 billion in Q2 2022, reflecting an increase of 18 per cent from Q2 2021. The small-cap restaurant operator highlighted that system sales increased by 55 per cent in Canada, one per cent in the United States and 19 per cent internationally in the latest quarter.

MTY Food posted digital sales of C$ 206.9 million in the second quarter this year, up from C$ 203.4 million a year ago. The restaurant franchisor saw its revenue at C$ 162.51 million in Q2 2022 compared to C$ 135.85 million in the same period of 2021. Earlier in August, MTY Food inked a definitive agreement to buy BBQ Holdings (NASDAQ: BBQ, BBQ: US) for a cash consideration of US$ 17.25 per BBQ share to scale up its US food service business.

MTY Food stock jumped by nearly 15 per cent in six months. As per Refinitiv findings, the MTY stock had an RSI value of 47.62 on August 31, expressing a moderate market trend.

3.     Transat A.T. Inc (TSX: TRZ)

Transat reported C$ 358.15 million in revenues in Q2 2022, comparatively high from C$ 7.56 million in Q2 2021, mainly driven by resumed operations after Omicron effects faded by the end of February. However, the tourism company still posted an operating loss of C$ 87.51 million in the latest quarter compared to C$ 86.48 million in the previous year's second quarter.

In the balance sheet, Transat posted cash and cash equivalents of C$ 511.21 million as of April 30, 2022, a high from C$ 433.19 million recorded as of October 31 last year, representing improved liquidity.

Transat scrip was down by approximately 25 per cent year-to-date (YTD). As per Refinitiv information, the TRZ scrip appears to be on a bearish trend as its RSI value was 33.02 (slightly above the oversold mark of 30) on August 31.

4.     Mullen Group Ltd (TSX: MTL)

Mullen Group said its revenue increased by 66.9 per cent YoY to C$ 521.5 million in Q2 2022. The transportation and logistics service company improved its net income to C$ 42.7 million, noting significant growth of 96.8 per cent YoY. The small-cap firm also doles out a monthly dividend of C$ 0.06 (the next payment is scheduled for September 15).

As for Mullen’s stock performance, the MTL stock zoomed by roughly 25 per cent QTD. As per Refinitiv data, Mullen stock had a moderate RSI value of 46.65 on August 31.

QSR to CJR.B: TSX stocks to watch as Canada’s GDP climbs 0.1% in June©Kalkine Media®; ©Garis Studio via Canva.com

5.     Cargojet Inc (TSX: CJT)

Cargojet saw its net profit increase to C$ 160.9 million in Q2 2022, reflecting a notable improvement from a loss of C$ 11.1 million in the same quarter the previous year. Cargojet also posted a growing adjusted free cash flow (FCF) of C$ 44.8 million in the latest quarter than C$ 36 million reported in Q2 2021.

Cargojet stock dipped by about 17 per cent YTD. According to Refinitiv, the CJT stock held an RSI value of 37.16 on August 31.

6.     Corus Entertainment Inc (TSX: CJR.B)

Corus Entertainment saw its consolidated revenue climb eight per cent YoY to C$ 433.45 million in Q3 2022. This revenue growth was helped by a six per cent increase in television revenue and a 27 per cent rise in radio revenue in the latest quarter. However, Corus reported basic earnings per share (EPS) of C$ 0.14 in Q3 2022, down from C$ 0.2 posted in the third quarter a year ago.

Besides this, Corus will also deliver a quarterly dividend of C$ 0.06 on September 29. Due to its stock performance, Corus stock gained nearly five per cent QTD. As per Refinitiv, the CJR.B stock had an RSI value of 43.1 on August 31.

Bottom line

Statistics Canada revealed that client-facing industries led the growth in Q2 2022, with a 14.3 per cent gain in the accommodation and food service sector. Meanwhile, the entertainment and recreation sector increased by 19.8 per cent, and air transportation jumped by 63 per cent in the second quarter this year, supported by eased pandemic restrictions. Considering these latest GDP figures, investors could explore the TSX stocks discussed above.

Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.


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