5 best Canadian mid-cap stocks to buy this September

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 5 best Canadian mid-cap stocks to buy this September
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Highlights

  • The highest one-year stock return posted by mid-cap companies featured in this list is close to 416 per cent.
  • Pfizer, a leading oncological and drug-making company, is set to acquire one of the below companies.
  • Many of these mid-cap companies have a history of paying dividends, with the highest five-year dividend growth being 33.57 per cent.

Many investors prefer to invest in stocks that are less volatile and risky. These investors might not have a pocket-friendly budget to buy expensive stocks yet might prefer companies with a well-known business model.

Mid-cap stocks are a perfect fit for them. As the name suggests, these stocks fall between large-cap and small-cap stocks.

Mid-cap stock companies generally have a market cap of C$ 2 billion to C$ 10 billion and are less risky than small, penny, and nano stocks.

The S&P/TSX Composite Index posted a YTD return of 19.28 per cent, whereas one of the mid-cap stocks mentioned here posted a YTD return of 118.56 per cent, outperforming the index.

The mid-cap stocks mentioned here have dividend-paying histories, sound business models, and strong stock price growth.

Let us explore these mid-cap stocks.

5 Best Canadian Mid Cap stocks to buy this September
  1. Stelco Holdings Inc (TSX: STLC)

Stelco is a dividend-paying steel company that produces and sells steel products used in industries and sectors like energy, automobile, appliances, etc. On August 31, 2021, the company paid a quarterly dividend of C$ 0.20 per share to its shareholders. The dividend yield was 1.61 per cent on September 3, 2021.

The company held a market cap of C$ 4.4 billion, and its stock price closed at C$ 49.68 on September 2, 2021. In one year, the stock price ballooned close to 416 per cent.

In the second quarter of FY2021, Stelco posted revenue of C$ 918 million, up 123 per cent Year-over-Year (YoY). The adjusted EBITDA margin was 45 per cent in the same quarter.

The management of Stelco commented that the construction of a 65 megawatts (MW) electricity project, which is to be commissioned in FY2022, is believed to reduce electricity costs and CO2 levels.

As per its valuation metrics, the steel company posted a return on equity (ROE) of 61.65 per cent, return on assets (ROA) of 19.27 per cent, and earnings per share (EPS) of 3.91.

 

  1. Premium Brands Holdings Corporation (TSX: PBH)

The consumer goods company manufactures specialty food and distributes premium food in regions like Alberta, Ontario, Nevada, etc. Premium Brands Holdings held a market cap of C$ 5.89 billion on September 2, 2021, and the company operates in both Canada and the US.

Stocks of Premium Brands were priced at C$ 135.02 at the market close on September 2, and on this day, these stocks traded 44 per cent above their 52-week low of C$ 93.66 (September 4, 2020). On a year-to-date (YTD) basis, the stock price returned 34 per cent.

The company is set to issue a quarterly dividend of C$ 0.635 per share payable to its investors on October 15, 2021. The average five-year dividend growth stands at 10.12 per cent, and the dividend yield was 1.88 per cent on September 2.

Premium Brands posted revenue of C$ 1.2 billion and volume growth of 17.8 per cent in Q2 FY21. The company acquired Mermax, a food distribution company, during the quarter. The ROE of Premium Brands was 8.02 per cent, and the price-to-earning (P/E) ratio stood at 53.

 

Also Read: 8 Canadian mid-cap Stocks to buy

 

 

  1. Ovintiv Inc (TSX: OVV)

The C$ 9.32 billion market cap oil and gas company is set to pay a quarterly dividend of US$ 0.14 per share payable on September 30, 2021, and its current dividend yield stands at 1.97 per cent. The dividend grew 7.72 per cent on a three-year average. Ovintiv produces natural gas-based products and crude oil.

Ovintiv posted a price-to-book (P/B) ratio of 1.87, and its ROE stood at 15.86 per cent. The company incurred a net loss of US$ 205 million in Q2 FY21. However, its cash flow from operating activities was US$ 750 million in Q2 FY21.

The total production for the company during the same quarter was 555 thousand barrels of oil equivalent per day (BOE/d).

Over the past year, the stock price of this oil company rocketed by 157 per cent. However, on a quarter-to-date (QTD) basis, it dipped by nearly nine per cent. On September 2, the stock price closed at C$ 35.65 and traded 293 per cent above its 52-week low of C$ 9.07 on the same day.

 

Also Read: What Are The Best Canadian Mid Cap Stocks To Buy?

  1. Trillium Therapeutics Inc (TSX: TRIL)

This biotechnology company develops therapies for the treatment of cancer and operates in Canada and the US. Trillium Therapeutics held outstanding shares of 104.81 million and a market cap of C$ 2.28 billion (at the time of writing).

The stock price of the biotech company closed at C$ 21.78 on September 2, 2021. On the same day, it traded 191 per cent above its 52-week low of C$ 7.48 (August 20, 2021). The stock price returned 81 per cent on a QTD basis, but it returned 61 per cent over the past year.

As per the latest quarterly report, Trillium Therapeutics is set to be acquired by Pfizer, a leading company developing oncological and immuno-therapeutics to treat hematological malignancies.

The company posted an EPS of 0.89 and a P/B ratio of 7.4. In Q2 FY21, the biotech company incurred a loss of US$ 18.39 million.

 

  1. goeasy Ltd. (TSX: GSY)

goeasy is a financial service company providing credit in the form of unsecured loans for its customers to buy furniture, appliances, etc.

The company is scheduled to pay a quarterly dividend of C$ 0.66 on October 8, 2021. The five-year dividend growth stands at 33.57 per cent, whereas the current dividend yield stands at 1.31 per cent.

As per its valuation metrics, the financial firm posted an ROE of 39.19 per cent and a debt-to-equity (D/E) ratio of 2.03.

goeasy posted revenue of C$ 202 million, an increase by 34 per cent YoY, in Q2 FY21. Its operating income was C$ 56.1 million in the same quarter. During the quarter, the company experienced an improvement in credit quality, loan growth, and an increase in loan origination.

Over the past year, the stock price of goeasy expanded nearly 198 per cent and closed at C$ 200.33 on September 2, 2021.

Bottom line:

Risk is inherent while investing in securities or any form of asset class, for that matter. The degree of risk and volatility in mid-cap stocks is generally lower compared to penny or nano stocks, although this is not a rule.

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