Overview

As we step into 2024, the TSX (Toronto Stock Exchange) has revealed its coveted list of Megastars—20 outstanding stocks that showcase the perfect blend of value and momentum characteristics. This prestigious ranking helps investors navigate the Canadian stock landscape, spotlighting companies that have demonstrated solid performance and growth potential.

Top Megastars

**Air Canada (AC)**, the country’s largest airline, has seen its stock soar by an impressive 63% in just three months. Surprisingly, it trades at a modest eight times forward earnings estimates, highlighting its potential for further gains.

**CES Energy Solutions (CEU)**, based in Calgary, has had a monumental year, with its stock skyrocketing by 189%. Recognized as the best-performing returning Megastar, it trades at a reasonable 12 times earnings and has managed to reduce its share count by 4.7% over the past year.

**CIBC (CM)** stands out as the largest Megastar this year, boasting a market capitalization of $90 billion. This Toronto-based bank has a return on equity of 13% and a solid dividend yield of 4.1%. Recently, it increased its quarterly dividend-per-share by 7.8%, showcasing its commitment to shareholders.

**Cogeco Communications (CCA)** is another notable player, with a strong presence in telecommunications and a substantial dividend yield of 5.2%. Over the last four quarters, it has reduced its share count by 5%, effectively boosting its shareholder yield to an impressive 10.2%.

**Dundee Precious Metals (DPM)** specializes in gold mining and operates globally in Bulgaria, Serbia, and Ecuador. With an attractive valuation trading at eight times earnings and six times forward estimates, it also holds a modest dividend yield of 1.7%.

**E-L Financial (ELF)**, which oversees Empire Life Insurance and has a significant stake in Algoma Central (ALC), is known for issuing substantial special dividends. Its stock trades at just 62% of its net equity value, offering potential for astute investors.

**Fairfax Financial (FFH)** is helmed by the well-regarded Prem Watsa, often compared to Warren Buffett. With a stock increase of 63% over the past year, it trades at a reasonable valuation of 1.37 times book value.

**Gildan Activewear (GIL)** continues to thrive in the apparel sector while maintaining a stable dividend yield of 1.7%. Its stock has benefitted from a reduction in share count by 9.9%, leading to a shareholder yield of 11.6%.

**iA Financial (IAG)** operates primarily in insurance and wealth management and offers a dividend yield of 2.6% while trading near 11 times forward earnings estimates. It too has decreased its share count significantly, benefiting shareholders.

**Iamgold (IMG)** has recently made strides in its gold production, with a new mine in Ontario contributing to its stock price surge of 179%. It trades at an appealing eight times forward earnings estimates.

**IGM Financial (IGM)** has a robust asset management portfolio, nearing $273.4 billion in assets under management. This Winnipeg-based company enjoys a 4.7% dividend yield and trades close to 10 times earnings.

**Imperial Oil (IMO)**, a prolific oil and gas player based in Calgary, also demonstrates a strong shareholder commitment with a 2.3% yield and a share count reduction that enhances its shareholder yield to 9.9%.

**Manulife Financial (MFC)** specializes in insurance and wealth management across North America and Asia, yielding 3.6% with its well-managed stock reflecting near 11 times forward earnings estimates.

**Onex (ONEX)** focuses on private equity investments and, despite its low dividend yield of 0.3%, has reduced its share count by 5%, presenting a unique opportunity for growth-oriented investors.

**Power Corporation (POW)** is identified as a financial giant focusing on services across North America and Europe, trading at 0.80 times its adjusted net asset value.

**Secure Energy Services (SES)** capitalized on the energy infrastructure and waste management boom, nearing a 97% stock price increase and trading at just eight times earnings.

**Sun Life Financial (SLF)** provides extensive life and health insurance services globally, and increased its dividend by 7.7% recently while trading around 11 times forward earnings estimates.

**Tamarack Valley Energy (TVE)** is focused on oil and gas operations in Alberta. It trades at a compelling 7 times earnings and offers a 3.4% dividend yield.

**TC Energy (TRP)** has a solid reputation in the natural gas pipeline sector, consistently growing its dividends for 24 consecutive years, currently yielding 4.9%.

**Transcontinental (TCL.A)** excels in printing and packaging, offering a generous dividend yield of 5.1% while trading below its book value at 0.77 times.

Conclusion

With these promising stocks classified under our Megastar ranking, investors currently have exciting opportunities to explore promising returns while balancing value and momentum in their portfolios for 2024. Stay tuned for more updates and insights on these incredible Canadian stocks!