- With the central banks likely to hike rates, large cap stocks may fare better than small cap companies
- These three stocks trading on the TSX signify different industries, and all have a high market cap
- Aside from energy stocks, retail, insurance, and media stocks also make for a close watch
Did you know that the benchmark of the Canadian stock market, the TSX Composite Index, had in 2021 its best year since over a decade? Amid all the pandemic-induced restrictions, stocks did not seem to lose sheen in the Canadian investment landscape.
This year, however, the TSX Composite Index has not performed well so far. As of writing, its year-to-date (YTD) return was in the negative. However, the one-year return of the index was over 11 per cent.
A few analysts are suggesting this may be a time to look for comparatively safer high market cap stocks. This is because these companies have comparatively solid fundamentals, which may not usually allow wild fluctuations in prices.
Let’s look at three TSX high cap stocks, each representing a different sector.
1. Thomson Reuters Corporation (TSX:TRI)
Though many people, regardless of whether they own this stock or not, are aware of the name, not all may know that Thomson was a Canadian entity, which merged with the UK based Reuters in 2008. This coming together has produced one of the biggest media conglomerates in the world.
Separately, it has accounting software and legal data verticals. In February this year, the company reported its figures for the last year. Total revenue of Thomson Reuters was up by six per cent in 2021, with the company having raised its 2022 and 2023 guidance for organic revenue.
Operating profit, however, fell in FY2021, which the company attributed to factors like the inclusion of the sale of an investment in the full-year profit of 2020.
Thomson Reuters had a market cap of nearly C$63.8 billion as of writing. The share closed at C$131.34 Tuesday, March 15, as compared to a 52-week high of C$156.62.
2. Alimentation Couche-Tard Inc. Class A Multiple Voting Shares (TSX: ATD)
The company runs convenience stores in multiple geographies. Alimentation Couche-Tard Inc. deals in a slew of products including tobacco and groceries. The company has interests in countries like Egypt and China through its Circle K stores.
According to the latest earnings data, Alimentation Couche-Tard Inc. had net earnings of over US$746 million in Q3 of fiscal year 2022. In the corresponding period last year, the company had net earnings of nearly US$607 million.
Alimentation Couche-Tard Inc. had a market cap of nearly C$50.8 billion as of writing. The share traded at C$47.91 Tuesday, as compared to a 52-week high of C$55.42
3. Manulife Financial Corporation (TSX:MFC)
Manulife Financial is one of the largest insurance entities in Canada. It competes with the likes of Sun Life, and Great West Life. The company is into insurance as well as wealth management services.
Recently, the company hosted Malala Yousafzai for a discussion on education and empowerment. For 2021, Manulife Financial’s net income attributed to shareholders amounted to C$7.1 billion, which was up C$1.2 billion as compared with 2020.
Manulife Financial had a market cap of nearly C$47.6 billion, as of writing. The share traded at C$24.52, as compared to a 52-week high of C$28.09.
The above three seem to have good fundamentals. They represent different sectors, and their high market caps may make them a little more immune to wild fluctuations, particularly when interest rate hikes and geopolitical trouble in Europe are making riskier assets like stocks more volatile.
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.