We asked our Foolish writers for their top ideas for this year. Here are their picks.
Amy Legate-Wolfe: Shopify
Shopify (TSX:SHOP)(NYSE:SHOP) has seemed like a far off dream for many investors over the last two years. Share prices soared way too high to even consider it. However, the recent pullback in tech stocks has left an opportunity that is, frankly, far too great to pass up.
Shopify continues to trade down 35% from all-time highs, with analysts giving it a consensus target price of $1,965. This comes from the company’s strong business model, supported by stellar growth in its key metrics. Merchants continuing to flow to Shopify, especially with a new app that allows you to find new merchants by searching for products.
With Shopify payments, fulfillment centres, and more, the company managed to outpace some of the biggest e-commerce companies, even as supply-chain demands threatened growth. The last year has proven Shopify can withstand the pressure, even as fearful investors drop the tech stock. So, I would certainly consider adding Shopify to your portfolio before it booms back to $2,000.
Fool contributor Amy Legate-Wolfe owns shares of Shopify.
Tony Dong: Mercer International
My top pick is a small-cap stock with consistent financials and low valuation multiples. I’m a big fan of Fama-French factor investing and believe the size and value factors will produce a positive risk premium over a sufficient time horizon.
Mercer International (TSX:MERC)(NYSE:MERC) fits that criteria. With a market cap of $772 million, MERC currently has some great valuation metrics, including a EV/EBITDA of 4.92, P/E of 9.36, a forward P/E of 8.25, a P/S of 0.46, and P/B of 1.24.
Fundamentals are solid, with a ROA of 6.81%, ROE of 14.17%, operating margin of 13.84%, and profit margin of 4.96%. The balance sheet is healthy, with a current ratio of 3.71 and $338 million in cash on hand. The company also pays a respectable dividend, with a yield of around 2.21% and a sustainable payout ratio of 20.63%.
MERC is currently trading at $11.93, or 34% off its 52-week high of $18.14. With 39% of the available share float held by insiders, it’s a strong bet that management thinks the company is undervalued.
Fool contributor Tony Dong has no position in any of the stocks mentioned.
Kay Ng: Manulife
High inflation can make value stocks that provide high yields and dividend growth more popular in 2022. One such opportunity is provided through my top stock for the year, Manulife (TSX:MFC)(NYSE:MFC). Moreover, the life and health insurance company should also benefit from rising interest rates.
Manulife has persistently underperformed, but its earnings since 2012 have improved in stability. If it continues to execute and grow its earnings at a single-digit rate, the dividend stock could break out of the low-valuation spell.
Investors get a 5% yield and a growing dividend for their patience.
Fool contributor Kay Ng owns shares of Manulife.
Vishesh Raisinghani: MDA
Little-known Canadian spacetech company MDA (TSX:MDA) is my top pick for 2022.
The company provides robotics and satellite data services to corporate and government clients across the world. The company’s geointelligence services helps shipbuilders monitor the progress of their projects and helps coast guards prevent illegal fishing or smuggling. Meanwhile, long-term projects, such as the Canadarm3 on the lunar gateway and the Telesat Lightspeed satellite internet project, should bolster the company’s top line in the years ahead.
In 2022, the MDA team is targeting revenue of $750-$800 million, which would imply that the stock is currently trading at a forward price-to-sales multiple of 1.4-1.5. Keep an eye on this moonshot.
Fool contributor Vishesh Raisinghani has no position in any of the stocks mentioned.
Nicholas Dobroruka: Lightspeed Commerce
Now is the time to be investing in high-growth tech stocks. Many top tech companies are coming off subpar years in 2021 and are trading at very opportunistic discounts right now. And that certainly includes Lightspeed Commerce (TSX:LSPD)(NYSE:LSPD).
Shares of the $7 billion tech stock were down more than 40% last year. In comparison, the S&P/TSX Composite Index was up over 20%. But even with the selloff, long-term Lightspeed shareholders have been well rewarded. Shares are up a market-crushing 160% since the company went public in 2019.
The tech stock may have had an off year in 2021 but business continues to soar for Lightspeed. Year-over-year quarterly revenue growth came in at 220% in the company’s fiscal 2022 Q1 and was just shy of 200% in Q2.
If you’re looking to add some growth to your portfolio in 2022, this tech stock should be near the top of your watch list.
Fool contributor Nicholas Dobroruka owns shares of Lightspeed Commerce.
Vineet Kulkarni: Vermilion Energy
The energy sector looks in tremendous shape this year, after having a blockbuster year in 2021. One TSX energy stock that looks attractive is Vermilion Energy (TSX:VET)(NYSE:VET). Rallying oil prices will likely fuel Vermilion’s free cash flow growth this year, facilitating higher shareholder payouts and debt repayments.
Vermilion sees its dividends resuming in 2022 if energy commodity prices remain supportive. Continued strength in oil and gas prices should improve its balance sheet strength.
Superior financial growth drove VET stock 175% higher in the last 12 months. Still, it is trading four times its earnings and looks discounted. Attractive valuation and strong earnings prospects will likely provide a huge runway for Vermilion stock in 2022.
Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned.
Sneha Nahata: goeasy
I am bullish on goeasy (TSX:GSY) for 2022 and beyond. This subprime lender continues to grow rapidly and has consistently delivered profitable growth over the past several years. Looking ahead, goeasy could continue to deliver strong financials on the back of higher loan origination, new product launches, and omnichannel offerings.
Furthermore, acquisitions, increased penetration of secured loans, strong payment volumes, and operating leverage will cushion its earnings and support the uptrend in its stock.
Besides capital appreciation, goeasy will continue to enhance its shareholders’ returns through higher dividend payments. Thanks to its strong earnings base, goeasy has raised dividends for seven years in a row and is positioned well to grow its dividends further in the coming years.
Fool contributor Sneha Nahata has no position in any of the stocks mentioned.
Robin Brown: BRP
With tech stocks hitting a major wall in 2022, other growth sectors might start to outperform. BRP (TSX:DOO)(NASDAQ:DOOO) is a top growth-at-a-reasonable-price stock. It is a brand-leading manufacturer and distributor of recreational vehicles across the world. This stock has delivered a 285% return over the past five years. It has grown earnings per share by a compounded annual growth rate of 25%!
Yet BRP stock only trades with a price-to-earnings ratio of 10. The company generates a tonne of free cash flow, and it has quickly been reducing its share count. New manufacturing capacity and an innovative product line up should help propel strong results in 2022.
Fool contributor Robin Brown owns BRP Inc.
Jed Lloren: Bank of Nova Scotia
My top stock for 2022 is Bank of Nova Scotia (TSX:BNS)(NYSE:BNS). It’s expected that interest rates will rise this year. If that happens, it could result in a correction for growth stocks. However, other industries, like the banking industry, are known to outperform during periods of high interest rates. This is often because banks see greater profit margins in high-interest environments.
Aside from the potential change to interest rates, Bank of Nova Scotia can also generate a lot of growth from its international business. The company is Canada’s most international bank and is well positioned to grow in developing markets over the coming years.
Fool contributor Jed Lloren has no position in any of the stocks mentioned.
Karen Thomas: Barrick Gold
In 2022, the threat and realities of inflation loom large. This has me thinking about hedging this risk. Therefore, my top pick for 2022 is Barrick Gold (TSX:ABX)(NYSE:GOLD). Barrick is the largest gold stock with a market capitalization of $43 billion. It’s also the one that’s most well-known among investors. This translates into Barrick being the stock of choice for gold exposure.
So, if things happen this year as I believe they will, it will mean solid gains for the price of gold and for gold stocks like Barrick. In the U.S., inflation is at 40-year highs. This will result in a weak and falling U.S. dollar. If the U.S. dollar won’t be a good store of value anymore, investors will look elsewhere — namely, at gold, which has always been an excellent store of value. Hence, Barrick Gold makes for an excellent stock pick today.
Fool contributor Karen Thomas has no position in any of the stocks mentioned.
Andrew Walker: Algonquin Power
The company is in the process of making a large acquisition that will increase the customer base by 19%, the rate base by 32%, and the size of the distribution and transmission infrastructure by 37%. The purchase of Kentucky Power is expected to close around the middle of 2022.
Algonquin Power recently announced a US$12.4 billion capital program for 2022 to 2026. This should support steady revenue growth, and management expects adjusted net earnings per share to increase by 7-9% over the next five years.
Algonquin Power has increased the dividend by 10% annually for the past decade. The stock currently provides a 5% dividend yield.
Fool contributor Andrew Walker owns shares of Algonquin Power.
Stephanie Bedard-Chateauneuf: Nuvei
Nuvei stock had a hard time in December after short-seller Spruce Point Capital released a report attacking the company’s management, which sent shares down 40% in only one day. Nuvei responded the report accusations weren’t justified.
Shares of Nuvei have jumped recently after the company announced a partnership with Web3 platform Flow for NFT purchases. Analysts remain convinced that the future belongs to these payment platforms. Nuvei now occupies a strong position in this market, with an incredible international presence. The stock is still quite weak from 52-week highs and analyst consensus estimates.
Investors should take advantage of the weakness in Nuvei stock to buy more shares. The stock has a forward P/E ratio of 28.65, which is low for at tech stock.
Fool contributor Stephanie Bedard-Chateauneuf owns shares of Nuvei.
Andrew Button: Royal Bank of Canada
In times when interest rates are rising, there are few stocks better to hold than banks. Higher interest rates lower the value of explosive future growth (small-cap tech), while increasing the financing costs of capital-intensive value stocks (utilities).
Banks like Royal Bank of Canada are among the few assets that can do well in such an environment. Banks often enjoy higher profit margins on loans when interest rates rise. That, in turn, can lead to higher earnings.
The above is true of all banks. So, why RY specifically? It comes down to stability. RY is Canada’s biggest bank and one of the oldest. It hasn’t missed a single dividend payment in about 150 years. That’s a track record you can trust. But even with all that stability, RY doesn’t want for growth. In its most recent quarter, it grew net income by 40% and EPS by 41%. Also, the 3.3% dividend yield doesn’t hurt.
Fool contributor Andrew Button has no position in any of the stocks mentioned.
Ambrose O’Callaghan: Savaria
My top stock pick for 2022 is Savaria (TSX:SIS). This Quebec-based company provides accessibility solutions for elderly and physically challenged people in Canada and around the globe. The accessibility and mobility market are geared up for big growth due to a rapidly aging population in Canada and the rest of the developed world.
Shares of Savaria are trading in favourable value territory at the time of this writing. In Q3 2021, the company delivered revenue growth of 99% to $180 million. Meanwhile, adjusted EBITDA jumped 55% to $26.3 million. Better yet, this stock offers a monthly dividend of $0.042 per share. That represents a 2.7% yield.
Fool contributor Ambrose O’Callaghan has no position in any of the stocks mentioned.
Daniel Da Costa: Galaxy Digital Holdings
With all the long-term potential that the cryptocurrency industry has, it’s worth allocating a small portion of your portfolio to it. And the earlier you can find high-quality companies in the space, the better you’ll position yourself for long-term growth.
That’s why my top pick for 2022 is Galaxy Digital Holdings (TSX:GLXY). Galaxy is a financial services company perfectly positioned to grow off of both the growth of retail investors and institutional investors in the space.
Its five segments offer diversification as well as more opportunities for growth, and the company is led by an incredibly qualified management team. Crypto can be volatile in the short term, but in the long run, it offers significant potential, and Galaxy Digital is one of the best stocks in the industry; therefore, it’s my top pick for 2022.
Fool contributor Daniel Da Costa owns shares of Galaxy Digital Holdings.