These 3 TSX Stocks Are Set to Soar in 2023 and Beyond

These three TSX stocks are massively outperforming the TSX in 2023. Here’s why they could continue to soar this year and beyond.

| More on:
potted green plant grows up in arrow shape

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn moresdf

2023 has started out as a cheerful year for TSX stocks! The TSX Index is up over 7% to +20,750 points. Considering last year’s ugly decline, it is a rapid reversion in sentiment.

Now, it is hard to say what Canadian stocks will do going forward. What I do know is that if you buy stocks in high-quality companies, it tends to pay off over time. In fact, some of the best-quality TSX stocks have been the quickest to rebound. Many are now hitting new 52-week highs and some even all-time highs.

It simply demonstrates that when you invest, you need to think long term. If you own a great business, holding through thick and thin can make the difference between long-term gains or short-term losses.

If you are looking for some TSX stocks that are set to soar in 2023 and beyond, here are three top stocks on my radar.

Constellation Software: A top TSX software stock

Created with Highcharts 11.4.3Constellation Software PriceZoom1M3M6MYTD1Y5Y10YALLstaging.www.fool.ca

Constellation Software (TSX:CSU) has already been on a tear in 2023. Its stock is up 12% year to date. Year over year, it is up 13%, so if you held even through the downturn, you’d be up by a decent margin. It is trading near a new all-time high today.

Constellation is a decentralized acquirer of small, niche software companies around the globe. It has over 600 businesses under its umbrella. While it doesn’t grow much organically, it is a maverick at acquiring high cash-yielding businesses at attractive valuations.

Now, Constellation is undoubtably an expensive TSX stock. It trades for 33 times forward earnings. However, acquisition growth has been accelerating ($1.3 billion in 2021 and $1.795 billion in 2022). At some point, those new cash flows will hit the bottom line, and Constellation could surge for its elevated growth.

BRP: A top discretionary stock

Created with Highcharts 11.4.3Brp PriceZoom1M3M6MYTD1Y5Y10YALLstaging.www.fool.ca

Another TSX stock that has been performing very well is BRP (TSX:DOO). Year to date, it is up 18%. Like Constellation, it has recovered all its losses from 2022 and is up 19% over the past 52 weeks.

BRP owns leading brands (Can-Am, Ski-Doo, and Sea-Doo) for high-powered motor and water vehicles. Despite global economic worries, the company has continued to deliver strong +25% growth in 2022.

BRP has a great portfolio of products. Innovation should continue to drive growth in new categories. Despite solid growth, its stock only trades for 13 times earnings. The stock just needs to re-rate to valuations in line with peers for investors to see a nice, outsized return.

European Residential REIT: A deep-value TSX real estate stock

Created with Highcharts 11.4.3European Residential Real Estate Investment Trust PriceZoom1M3M6MYTD1Y5Y10YALLstaging.www.fool.ca

European Residential Real Estate Investment Trust (TSX:ERE.UN) is a little known Canadian real estate investment trust (REIT) that owns residential multi-family properties 100% in the Netherlands. This TSX stock has risen 22% so far this year. However, it is still down 13% from its price a year ago.

This presents an attractive opportunity for investors. Rental demand in the Netherlands is extremely high due to low housing inventory and strong immigration. Consequently, European Residential captures high occupancy and over 4% annual rental rate growth across its portfolio.

This TSX stock pays an attractive 4.5% distribution yield (which, it pays monthly). Yet, most importantly, even after its run-up, it trades at an approximate 40% discount to its private market value. Several market commentators have suggested this REIT could be privatized or sold given the extreme discount.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Robin Brown has positions in Brp, Constellation Software, and European Residential Real Estate Investment Trust. The Motley Fool recommends Brp and Constellation Software. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

A red umbrella stands higher than a crowd of black umbrellas.
Stocks for Beginners

Top Recession-Resilient TSX Stocks to Buy With $3,000

It's time to increase your exposure to defensives!

Read more »

An airplane on a runway
Stocks for Beginners

Will Bombardier’s Stock Price Keep Soaring in 2023?

Here are the top reasons why recent gains in Bombardier’s share prices could just be the start of a spectacular…

Read more »

Automated vehicles
Stocks for Beginners

Magna Stock: How High Could It Go in 2023?

Magna International could grow in 2023 as the electric vehicle market recovers. Could MG stock hit new highs?

Read more »

Man data analyze
Stocks for Beginners

3 Top Stocks to Buy Now in a Once-in-a-Decade Opportunity

The next decade could be absolutely insane for these three top stocks that offer growth in both the near and…

Read more »

Profit dial turned up to maximum
Stocks for Beginners

How TFSA and RRSP Investors Can Turn $20,000 Into $320,000 in 30 Years

Investing in the stock market and holding patiently over the long term is the key to success.

Read more »

tsx today
Stocks for Beginners

TSX Today: What to Watch for in Stocks on Tuesday, February 21

A minor recovery in oil and base metals prices could lift commodity-linked TSX stocks at the open today.

Read more »

Young adult woman walking up the stairs with sun sport background
Stocks for Beginners

New to Stocks? 5 Easy Tricks to Give You a Leg Up

New stock investors from all walks of life can improve their returns from applying some, if not all, of these…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Stocks for Beginners

2 Top TSX Stocks for TFSA Investors to Buy Now

If you have a long investment horizon, don't waste your TFSA on high-interest savings plans. Generate long-term wealth with these…

Read more »