We asked our top analysts for his or her favourite stocks to purchase this month.
Kay Ng: Canadian Western Bank (TSX:CWB)
Canadian Western Bank (TSX:CWB) remains my top idea from recently. Canadian Western is really a regional bank offering personal and business banking services over the four western provinces. It\’s even cheaper than last month, dropping from $31 to $28. This can be a 34% decline from the 52-week high of $43. Historically, the bank has traded in a price-to-earnings ratio (P/E) of 15.
Its normal multiple is 13.6 in line with the last five years. Today, it\’s trading close to a multiple of 10.3. In line with the previous multiples mentioned, the financial institution could trade between $37.2 and over $40. This implies coming back of 35.8-44.8% including the 3% dividend.
Canadian Western has increased its dividend each year for the past 23 years. It features a sustainable payout ratio of 28%, and a yield of 3%. The financial institution forecasts earnings growth between 5-8% in 2015 when compared with 2014\’s growth of 15%. Believing the lower earnings growth to be a temporary effect, at the moment levels, it\’s an even better opportunity than recently to get your on the job its shares for long-term capital gains along with a decent yield.
Fool contributor Kay Ng owns shares of Canadian Western Bank.
Doug Watt: CAE Inc. (TSX:CAE)(NYSE:CAE)
CAE Inc. (TSX:CAE) (NYSE:CAE) reported record annual revenues for 2014 as the flight simulator and training company continues to dominate the sector. CAE also set a new high for operating income and has an order backlog of more than $5 billion.
The company is expected to take advantage of a positive aerospace cycle over the next several years, with the weaker Canadian dollar and lower crude oil prices also providing stimulus.
CAE comes with an excellent portfolio of both civil and defence aviation contractors, with military cuts largely a part of the stock price, according to analysts.
Fool contributor Doug Watt doesn\’t have position in CAE.
Andrew Walker: SNC-Lavalin Group Inc. (TSX:SNC)
SNC-Lavalin Group Inc. (TSX:SNC) is really a value pick, albeit a controversial one.
The company trades at $44 per share. Its stake in Highway 407 may be worth about $20 per share and SNC has another $13 per share in cash and short-term investments. That leaves $11 per share for the rest of the business, together with a revenue backlog of more than $12 billion.
Concerns persist around the RCMP corruption charges that could lead to a ban on bidding for government contracts, but SNC just won a 35-year contract to construct and maintain Montreal\’s new Champlain Bridge. This doesn\’t guarantee the company will avoid a ban, however it sends a powerful message.
Fool contributor Andrew Walker has no position in SNC-Lavalin.
Ryan Vanzo: RMP Energy Inc. (TSX:RMP)
RMP Energy Inc. (TSX:RMP) is definitely an oil and gas producer in west-central Alberta. Despite rolling back its budget by over fifty percent to save on costs, the company still expects to grow production by 10-20% in 2015. Unlike its debt-ridden peers, RMP Energy is capable of paying down all outstanding debt with only one year of cash flows.
The company boasts an experienced, well-regarded management team which has a proven ability to grow production volumes even at lower prices. With an attractive asset base and significant financial flexibility, RMP Energy is positioned to thrive in a period of lower energy prices, while still poised to benefit immensely should prices rebound higher.
Fool contributor Ryan Vanzo doesn\’t have position in RMP Energy Inc.
Karen Thomas: Badger Daylighting Ltd. (TSX:BAD)
Badger Daylighting Ltd. (TSX:BAD) has been negatively affected by its contact with the gas and oil sector, addressing 50% of total revenues. But this represents a buying opportunity, because the company\’s hydrovac excavation services are in demand not only by the gas and oil industry, but also petro-chemical plants, power plants along with other large industrial facilities in North America.
The company has achieved strong margin improvements, with first quarter 2015 EBITDA margin coming in at 27.3%, and powerful growth in the U.S. business (11.8% growth in revenues in the latest quarter). The organization has consistently generated preferred tax treatment on equity well over 20%, a strong balance sheet and it is trading below 20 times earnings.
Fool contributor Karen Thomas doesn\’t own shares in Badger Daylighting.
Joseph Solitro: WestJet Airlines Ltd. (TSX: WJA)
WestJet Airlines Ltd. (TSX: WJA) is among the largest airline companies in North America, and it has been growing in a consistent rate during the last few years, including 40 consecutive profitable quarters. In its most recent quarter, its earnings per share increased 58% to $1.09 and its revenue increased 4% to $1.08 billion, both of which surpassed analysts\’ expectations.
At current levels, WestJet\’s stock trades at just 8.1 times fiscal 2015\’s estimated earnings per share of $3.32, which is very inexpensive compared to its five-year average price-to-earnings multiple of 13.8. Additionally, the company pays an annual dividend of $0.56 per share, giving its stock a couple.1% yield at today\’s levels, and it has increased its dividend 5 times in the last three years, making it among the top dividend growth plays in the industry.
I think WestJet will outperform the general market in both the short and long-term, so Foolish investors should strongly consider initiating positions today.
Fool contributor Joseph Solitro doesn\’t have position most of the stocks mentioned.
Neha Chamaria: Magna International Inc. (TSX:MG)(NYSE:MGA)
After zooming 14% over the past month, Magna International Inc. (TSX:MG)(NYSE:MGA) stock looks poised to rally even higher.
Recent strong sales momentum shows that the U.S. auto industry could easily top 2014 sales of 16.4 million new vehicles this year. That\’s a big catalyst for Magna considering that it gets a lot more than 50% of its sales from North America. Meanwhile, its recent partnership deal in China should give Magna strong foothold within the high-potential market.
At the same time frame, management does an excellent job with cost control, as evidenced by 18% jump in Magna\’s Q1 profits despite lower revenue. Higher sales, combined with lower costs, should raise the auto-parts manufacturer\’s profits and cash flows, thereby generating greater returns to shareholder.
For such solid growth prospects Magna stock happens to be trading at merely Ten times forward earnings. That certainly appears like a bargain, I\’d say.
Fool contributor Neha Chamaria has no position most of the stocks mentioned.
Jacob Donnelly: Canadian National Railway Company (TSX:CNR)(NYSE:CNI)
Because of great amount of fear related to regulation, Canadian National Railway Company (TSX:CNR)(NYSE:CNI) has been getting hammered within the markets, despite it had year-over-year growth in revenue of 15%. To top that off, it had a 30% year-over-year increase in profits. Does that appear to be a company that deserves to be down $15 per share in the last three months?
Because of how wide its moat is and the fact that it pays a decent yield of just one.71%, I feel confident that this stock is going to continue to see growth moving forward. Regulation may well be a little bit of a break, but it is clearly growing its revenues and profits, which should only result in more dividends for investors.
Fool contributor Jacob Donnelly doesn\’t own shares of Canadian National Railway Company
Nelson Smith: Corus Entertainment Inc. (TSX:CJR.B)
Thanks to fears about new CRTC rules allowing customers to pick and choose individual cable channels from 2016, shares of Corus Entertainment Inc. (TSX:CJR.B) have fallen a lot more than 30%.
This slide makes shares really cheap. They trade just 10% above book value, and at eight times the business\’s projected 2015 free income. Other companies within the sector trade at between 16 and 20 times their free income.
Plus, investors are getting a generous 6.5% dividend, a payout of approximately 40% of the projected free income. The low valuation and terrific dividend combine to make a pretty compelling value proposition.
Fool contributor Nelson Smith owns shares of Corus Entertainment.
Robert Baillieul: Brookfield Infrastructure Partners L.P. (TSX:BIP.UN) (NYSE:BIP)
Brookfield Infrastructure Partners L.P. (TSX:BIP.UN)(NYSE:BIP) is really a hidden gem. Actually, I doubt you\’ve ever heard of it. But when you own shares of this company, you have a piece of some of the most important infrastructure assets on the planet.
This partnership owns ports throughout Europe, railroads around australia, and toll roads throughout South America. They are irreplaceable assets. That\’s not to build another port or perhaps a new toll road alongside one already in place.
For shareholders, this has translated into steady income. Today Brookfield pays an every three months distribution of $0.53 per unit, which will come out to an annualized yield of four.7%.
Fool contributor Robert Baillieul has no position in almost any stocks mentioned.
Matt Smith: The financial institution of Quebec (TSX:BNS)(NYSE:BNS)
I have been bullish around the Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) for some time. This is because I have faith that its international exposure, notably to Latin America, offers solid long-term growth prospects. The economies in this area are significantly under-banked and their GDPs are expected to expand at a much better rate than Canada\’s.
Currently, the financial institution of Quebec derives around one fourth of its net gain from its international business. This helps to shield the bank from the financial fallout triggered by the oil rout and its impact on Canada\’s economy.
It also made a series of acquisitions in 2014 that beefed up its consumer lending portfolio, a space where it\’s traditionally lagged behind its big five peers. While this marginally increased the quality of balance sheet risk, it will help to drive higher earnings because the economy accumulates.
For these reasons, I expect the Bank of Quebec to remain one of Canada\’s top financial stocks, making it a core holding for just about any portfolio.
Fool contributor Matt Smith doesn\’t have position in any stocks mentioned.
The original version of this article can be seen at www.fool.ca