5 low-risk TSX stocks to add to your portfolio

Highlights

• One of the companies mentioned here posted net revenue growth of 121.7 per cent in its latest quarter.
• One of the companies on this list acquired 13 pharmacies in its latest quarter.
• Four companies among them have dividend-paying histories with the highest five-year dividend growth rate being 14.96 per cent

These low-risk stocks are sector agnostic and backed with positive revenue growth and fundamentals. Four among them have dividend-paying histories with the highest five-year dividend growth being 14.96 per cent and the highest three-year dividend growth being 11.69 per cent.

The highest ROE was 18.84 per cent, and the highest EPS was 10.73 among them. These stocks are representative of the financial service, healthcare, industrial, and consumer sectors.

The S&P/TSX Capped Financial Index posted a year-to-date (YTD) return of 23.22 per cent, the S&P/TSX Capped Health Care Index posted a YTD return of 2.14 per cent, and the S&P/TSX Composite Index posted a YTD return of 18.35 per cent. In contrast, one of these stocks posted a YTD return of 61.76 per cent.

On that note, let us look at some low-risk potential stocks for the investors.

1. Bank of Montreal (TSX: BMO)

The bank operates with four key divisions: wealth management, capital markets, commercial banking, and personal banking. Bank of Montreal held 646.95 million outstanding shares and a market cap of C$ 82.71 billion on September 13.

The bank's stock price traded 68 per cent above its 52-week low of C$ 75.92 (October 2, 2020) and closed at C$ 127.86 on September 10. Over the past year, the stock price returned close to 59 per cent.

The bank is set issue a quarterly dividend of C$ 1.06 per share on November 26. The dividend yield was 3.31 per cent and the five-year average dividend growth rate stands at 10.43 per cent.

In the third quarter of the fiscal year 2021, the bank posted a net income of C$ 2.27 billion, up 85 per cent Year-over-Year (YoY). Its Common Equity Tier 1 ratio was 13.4 per cent in Q3 FY21. The bank recovered a credit loss of C$ 70 million in the same quarter.

The bank posted return on equity (ROE) of 13.81 per cent , earnings per share (EPS) of 10.73, and a price-to-book (P/B) ratio of 1.54 on September 13.

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2. Canadian Western Bank (TSX: CWB)

Canadian Western Bank earns interest income as its main source of revenue. The C$ 3.1 billion market cap bank offers financing, leasing services, and also other banking services and investment products. On September 23, a quarterly dividend of C$ 0.29 is payable to its shareholders. The dividend yield was 3.25 per cent on September 13.

As per the valuation parameters, the bank posted an EPS of 3.46, a price-to-earning (P/E) ratio of 10.3, and an ROE of 10.38 per cent on September 13.

In Q3 FY21, Canadian Western Bank posted total revenue of C$ 263.2 million, up 16 per cent, and the loan portfolio was C$ 32.3 billion in the same quarter. 

The one-year stock return of the Canadian bank was 30 per cent, and on a YTD basis, the stock price returned 24 per cent. The 52-week high price of C$ 37.75 was reached on May 28.

Also Read: 3 Value Stocks To Buy in 2021

3. Aritzia Inc. (TSX: ATZ)

The apparel company designs clothes like pants, T-shirts, dresses, jackets, and accessories under its brand name. Aritzia Inc. operates both in Canada and the US. It held a market cap of C$ 4.71 billion on September 13.

On September 10, the stock price of Aritzia Inc. reached its 52-week high of C$ 42.07. The stock price traded nearly 156 per cent above its 52-week low of C$ 16.32 on September 10 and closed at C$ 41.72 apiece on the same day.

The net revenue of Aritzia Inc in Q1 FY22 grew by 121.7 per cent YoY, while its e-commerce revenue grew by 18.6 per cent YoY. Its adjusted EBITDA was C$ 40.9 million in the same quarter.  The company's management commented that retail sales in some of its stores returned to the pre-pandemic level faster than anticipated.

Over the past year, the stock price spiked up by 137 per cent and by close to 62 per cent on a YTD basis.

The ROE of the company was 18.84 per cent, the P/B ratio of 12.05 per cent, and ROA of 5.57 per cent on September 13.

Also Read: 3 dividend-paying health stocks for a healthy portfolio

4. Neighbourly Pharmacy Inc. (TSX:NBLY)

The healthcare company launched its initial public offering (IPO) on May 25, 2021, and was listed on the Toronto Stock Exchange. The company operates under the ticker (NBLY).

Neighbourly Pharmacy held 33.44 million outstanding shares and a market cap of C$ 1.09 billion on September 13. The company's stock price expanded by close to 17 per cent on a quarter-to-date (QTD) basis. However, in the last three months, it returned roughly 26 per cent.

The addition of 40 new pharmacies of Neighbourly Pharmacy in four quarters led to revenue growth of 55.2 per cent in Q1 FY22. The revenue reached C$ 85.3 million, and adjusted EBITDA was C$ 10.1 million in Q1 FY22.

The company also acquired 13 pharmacies in the same quarter.

A quarterly dividend of C$ 0.045 per share is expected to be rolled out on October 12. The dividend yield stood at 0.55 per cent on September 13. On this day, the company posted a debt-to-equity (D/E) ratio of 0.4 and a P/B ratio of 3.49.

5. Waste Connections Inc. (TSX: WCN)

The C$ 43.62 billion market cap firm is a waste management company that issued its latest quarterly dividend of US$ 0.205 on September 1. The dividend yield was 0.61 per cent, and the five-year dividend growth rate was 14.96 per cent (at the time of writing).

The stock price of Waste Connections closed at C$ 167.44, which was less than one per cent below its 52-week high of C$ 167.64 on September 10. It surged by 28 per cent on a YTD basis and by almost 14 per cent in the last three months.

Waste Connections collects and recycles waste from industrial, residential, and commercial locations. The company posted revenue of US$ 1.53 billion in Q2 FY2021, up from US$ 1.31 billion in Q2 FY2020.

The ROE and ROA of the company were 9.13 per cent and 4.4 per cent, respectively.

Bottom line:

Generally, strong fundamentals topped up with consistent revenue growth, and the emergence of new growth drivers is believed to pose less risk and a stable company. But many analysts also opine that the uncertainty of the market with giant swings should not be neglected by investors when they choose to invest in stocks.