5 TSX midcap stocks to buy

Highlights

  • One of the midcap companies mentioned below acquired Conrad & Bischoff Inc for its portfolio and this is believed to strengthen their supply chain in the US
  • The total loan portfolio of a banking company mentioned here grew by nine per cent YoY in its latest quarter.
  • The highest ROE was 19.95 per cent among them

The S&P/TSX Composite Index posted a year-to-date (YTD) return of 15.72 per cent, while the YTD return of the S&P/TSX Venture Composite Index dipped by 0.89 per cent. In contrast, one of the mid-cap stocks mentioned here posted a higher YTD return of 29 per cent.

Mid-cap stocks differ from penny, small-cap, and large-cap in terms of market cap and market volatility. The market caps of mid-cap stocks range from C$ 2 billion to C$ 10 billion, and these stocks offer less market volatility than the penny and small-cap stocks.

On that note, let us explore some of the mid-cap stocks.

  1. Canadian Western Bank (TSX: CWB)

The Canadian bank offers banking services like real estate financing, commercial banking, etc. to companies ranging from small to mid-sized. The bank also offers banking services to individual clients.

The bank paid a quarterly dividend of C$ 0.29 per share to its shareholders on September 23. The dividends grew at a five-year average of 5.31 per cent, and the dividend yield was 3.14 per cent on September 29.

The bank posted a return on equity (ROE) of 10.38 per cent, a price-to-earnings (P/E) ratio of 10.5, and held a market cap of C$ 3.21 billion on September 29.

The one-year stock return of Canadian Western Bank was close to 35 per cent. The stock reached its 52-week high of C$ 37.75 on May 28, and closed at C$ 36.93 on September 28.

The total revenue posted by Canadian Western Bank was C$ 263.2 million in the third quarter of fiscal 2021, an increase of 16 per cent Year-over-Year (YoY). Its total loan portfolio grew by nine per cent YoY, and net income was C$ 86 million in the same quarter.

The one-year period returns for Canadian Western Bank, Boralex, Parkland, Pan American Silver and Kinross Gold.

  1. Boralex Inc (TSX: BLX)

The energy company constructs and develops power facilities for renewable energy. The portfolio of Boralex includes thermal, solar fuel, and hydroelectricity plants. The shareholders of the energy company were paid a quarterly dividend of C$ 0.165 on September 16. The dividend yield was 1.75 on September 29.

The energy company's earnings per share (EPS) was 0.39, ROE of 4.58 percent as per its valuation metrics. The company held a market cap of C$ 3.86 billion on September 29.

The stocks of Boralex were priced at C$ 37.62 at market close on September 28. The stock price only increased by one per cent over the past year.

Boralex posted revenues of C$ 147 million from the sale of energy in Q2 FY21. Wind production increased by 33 per cent YoY in Q2 FY21, and its EBITDA was C$ 106 million in the same quarter. During the quarter, a total of 743 megawatts was added from the new projects of the company.

Also Read: 5 best Canadian mid-cap stocks to buy this September

  1. Parkland Corporation (TSX: PKI)

The oil and gas company distributes fuel and petroleum products used by businesses, bikers, commuters, and wholesalers in Canada and the US. Parkland is expected to issue a monthly dividend of C$ 0.103 to its shareholders on October 15. The dividend yield stood at 3.47 per cent on September 29.

Parkland held a P/E ratio of 50.7, ROE of 5.66 per cent, and ROA of 1.07 per cent. Moreover, the company held a market cap of C$ 5.39 billion and outstanding shares of 151.9 million on September 29.

The stock price of Parkland traded 10 per cent above its 52-week low of C$ 32.18 (October 30, 2020) and closed at C$ 35.49 on September 28. It dipped by three per cent over the past year.

In Q2 FY21, Parkland posted operating revenue of C$ 5.02 billion and adjusted EBITDA of C$ 322 million. During the quarter, the company acquired Conrad & Bischoff Inc to its US portfolio. The acquisition is believed to strengthen their supply chain in the US.

Also read: 8 Canadian mid-cap Stocks to buy

  1. Pan American Silver Corp (TSX: PAAS)

The dividend-paying mining company develops and explores silver mines. The company also sells zinc, lead, gold, and copper, which are derived as byproducts from its mining operations.  On September 3, a quarterly dividend of US$ 0.10 was paid to its shareholders, while the dividend yield was 1.66 per cent. The five-year dividend growth rate was 26.05 per cent.

The debt-to-equity (D/E) of Pan American Silver was 0.02. It also posted an ROE of 11.34 per cent, ROA of 8.43, and a market cap of C$ 6.32 billion (September 29).

On a quarter-to-date (QTD) basis, the stock price of Pan American Silver dipped by 15 per cent. At the market close on September 28, the stock price reached C$ 30.06.

In Q2 FY21, Pan American Silver posted a revenue of US$ 382.13 million, and net income was US$ 71.2 million.

  1. Kinross Gold Corporation (TSX: K)

The Canadian gold producing company held a market cap of C$ 8.48 billion and 1.26 billion outstanding shares (at the time of writing). Kinross Gold paid a quarterly dividend of US$ 0.03 on September 2. The dividend yield stood at 2.24 per cent.

The ROE and ROA of Kinross Gold were 19.95 per cent and 11.85 per cent. Moreover, the EPS was 1.29, and the P/E ratio was 5.2 (September 29).

The stock price of Kinross Gold dropped by 28 per cent on a YTD basis. The 52-week high price of C$ 12.38 was achieved on October 14, 2020, and on September 29, it closed at C$ 6.72.

Bottom line:

It is believed by many analysts that mid-cap stocks offer a better risk-return ratio that is less volatile than penny and small-cap stocks. However, a risk exists nonetheless.

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