Westjet Airlines

Westjet Airlines is a company you are probably very familiar with, and have used a number of times if you live in Canada. It started out as a more affordable alternative to Air Canada and has since grown into Canada's second largest airline, with flights to Europe, the Caribbean and many destinations in the United States. The company has been characterized by public generosity initiatives including this past year's Christmas Miracle that gave back to residents affected by the Fort McMurray wildfires. This is important to consider, as it shows management that cares about real people, which can do wonders for brand loyalty and public perception. During that same time, Air Canada was put under the gun when there was supposed price gouging during the wildfire, the business impact of which may never be fully understood with travellers announcing on social media their boycott of Air Canada.

Being based in western Canada, Westjet's stock price has tumbled from over $30 to just over $20 due to their usage for flying people for oil-related work whether it be to Fort McMurray or Calgary. However, with oil prices finding support at $50 and a deal announced back in September with Suncor that sees 100 weekly flights, I think the next year or two for Westjet looks promising. Finally, Westjet's expansion into intercontinental flights to London last year did not start out smoothly, with major delays causing Westjet to reimburse a huge number of passengers as per European regulations. But, those flights have since gone a lot better, and I can personally say that when I used Westjet to fly to London in September, there were no delays or issues. Westjet's interest in expanding into further long-haul routes could be a very strategic and beneficial expansion.

In terms of current financials, I like Westjet as they have been very stable, and don't have the ridiculous debt that Air Canada has (debt is equal to 99% of Air Canada's assets). The current PE ratio is a low 9.1, which is still lower than the historical average of 11, giving it room for more than 20% upside before it could be called "fair value." And due to that discount, you are getting a dividend of 2.59%, which has been growing every year in the last 5 years except last year, understandably. Heavy capital spending in recent years of close to a billion dollars a year point towards a strong future, as well. At a closing price of $22.18 per share, you get a decent dividend and great growth prospects at a sale price in an industry that even Warren Buffett has invested in recently. 
Disclosure: I currently do not own WJA.

Gildan Activewear

Gildan Activewear is a Canadian clothing manufacturer that has seen declining share prices for a few months. This may be a result of association with retail, which has had explainable declines due to disappointing holiday sales from many brick-and-mortar retailers. The decline can also be attributed to the potential new competition in its bid to acquire American Apparel assets from Amazon and Forever 21. With fears that a higher bid from these companies would put Gildan's strategic acquisition in jeopardy, I think that the fundamental business of making basic clothes is being forgotten. Whether or not Gildan acquires American Apparel, it has been growing revenue steadily for the past few years while keeping a low debt-equity ratio. Growth has slowed down, but capital spending has increased in recent quarters, with a recent acquisition of Peds Legwear, a hosiery company, falling in line with the "basics" clothing Gildan sells. This business is extremely stable compared to a typical retailer that depends on current fashion trends and styles. Geographically, Gildan sells clothing across Canada, the US and in Latin America, providing regional diversification and a potential for increasing growth in Latin America. At a closing price of $34.00 per share, you get a stable Canadian clothing company with potential for growth and an increasing (albeit mediocre) dividend of 1.16%, which has been paid out since 2011.
Disclosure: I currently own GIL.

Fairfax Financial Holdings

Fairfax Financial Holdings has appeared in one of my
previous articles as a way to hedge against inflation. Since then, Trump has been elected as the next president in the United States and inflation is expected under his touted heavy infrastructure spending. This is because if the United States government wants to build huge amounts of infrastructure, it will require more money, which increases the cost of borrowing. This, in turn, raises the "time value" of the US currency, causing the cost of everything to go up as there is a greater demand for cash within the country. Up until recently, Fairfax Financial held a large position in a deflationary bet, and with Trump elected, it becomes a position that is hard to justify. As a result, the losses incurred on that position have been mostly realized as Prem Watsa (Chairman and CEO) has decided to cut that position. What you have left is a fairly reasonably-valued insurance, reinsurance and infrastructure holding conglomerate with stable earnings. At a closing price of $637.60 per share, you get strong leadership in a company that isn't afraid to take large positions in macro bets for you, while keeping its cushion of increasingly valuable assets and stable insurance businesses. Although its yield and P/E ratio are not the lowest when compared to focused insurance companies such as Sun Life Financial and Manulife, book value remains at a very appealing 1.2. It also trades at a price within about 10% of its 52-week low while paying a dividend of 2.22%. Due to large writedowns on investment losses, expect an increase in share price at the next quarterly earnings, which will reflect the underlying business strength.
Disclosure: I personally own FFH.

Enbridge Inc.

Enbridge is one of North America's largest pipeline operators, transporting various crude oil blends, natural gas liquids (NGLs) and refined products like jet fuel and gasoline. It also acts as a natural gas utility in eastern Canada and has been growing its renewable asset portfolio with wind, solar and geothermal acquisitions and projects over time. It currently sits at $51.06, down from a recent high of around $55.00 and a more considerable all-time high of $65.05, which is not surprising given the industry it is in. The forward-looking price-to-earnings (PE) ratio is 28.37, which is on the higher side when considering the whole market but appears to be lower when looking at historical valuations. Compared to other Canadian peers like Transcanada (TSE: TRP) and Pembina Pipeline (TSE: PPL), it looks to be about par, but represents a more diverse range of business, which is why I find it more appealing. Growth appears to be limited, with a relatively high PEG ratio of 5.63. At this price, it has a 4.01% dividend, which has grown consistently for a number of years. It should be noted that Enbridge reports 2016 Q2 earnings on Friday, July 29th, and this singular event could push the stock down or up by the end of that day.
Disclosure: I personally own ENB.

WSP Global

WSP Global is an international engineering consulting company, and has fallen from its 52-week high of CAD$49.18 to just under $40.00. The forward-looking price-to-earnings (PE) ratio is a reasonable 14.20, which is just under average for the Toronto Stock Exchange, and low for the engineering consulting industry. Growth in earnings is still anticipated, with a PEG ratio of just 0.60. At this price, it has a respectable 3.83% dividend and represents an excellent long-term holding for both growth and dividend income. It should be noted that if you are worried about Brexit-related volatility, WSP has a relatively large UK division, which is part of the reason the current share price is lower. Future news about Brexit and its effect on multinational companies and global trade may move this lower.

Disclosure: I do not personally own WSP.

Power Corporation of Canada

Power Corporation of Canada is a holding company with interests focused primarily in the insurance and investment management industries alongside utility holdings, including green energy. POW also has minor assets in resource sectors. This stock represents a very diversified holding, reducing volatility, with the added bonus of a juicy 4.89% dividend at its current price of $27.42. Trying to achieve this same cash flow by investing in other companies within the industry would be a challenge, and POW is off its 52-week high of $32.65 by just over 15%, allowing for a good entry. The forward PE ratio is a very low 8.52, although historically, this stock has not had high PE ratios.
Disclosure: I do not personally own POW.

Telus Corporation

Telus is one of the largest telecommunications companies in Canada, and I like it more than the other telecoms (RCI.B, BCE, SJR.B) due to its lower PE of just 15.51. It does not have the highest dividend, but it is close at 4.30%. In terms of growth, to me, it has the best proposition for growth of all the telecoms. The PEG ratio is not low at 2.33, but compared to the other companies, it still has room to grow (Rogers has a dismal PEG ratio of 4.63). Buy Telus for a lower-volatility buy-and-hold income stock that should still see some share price appreciation in the mid- and long-term.

Disclosure: I personally own T.


Linamar is a volatile stock but has suffered a tremendous decline amid record earnings and consistent growth. It has lost close to half the value of its 52-week high of $82.63, down to $45.61, which screams value to me when you look at its forward PE of just 5.62
. This isn't a small, speculative, unknown company, either. At current prices, it has a market capitalization of over $3 billion, and is one of the largest auto-parts manufacturers in the world, as well as other metal components for industrial and manufacturing industries. Its dividend of just 0.88% is not very appealing, but it does have a PEG ratio is 0.56, implying healthy growth is still in the works for this company.
Disclosure: I personally own LNR.