The Smart Investor 9 Quebec Stocks for 2024

The Smart Investor: 9 Quebec Stocks for 2024

In this column, which appears every two weeks, we give you concrete ideas for investing.

The Canadian stock market has left many investors hungry in 2023, but the year that begins in two days could be more profitable. Here are nine Quebec stocks recommended by Desjardins and CIBC analysts.

• Also read: In the eyes of Quebec Inc.: Bombardier's big boss makes a nice profit

• Also read: 10 Lessons from an Investing Genius, Berkshire Hathaway's Number Two, Charlie Munger

“We believe that a more defensive positioning is appropriate, with a focus on companies whose earnings are de-risked or which have greater exposure to the American market,” write experts at CIBC Capital Markets in their 2024 stock market outlook.

CIBC forecasts 2024 returns of around 5% for both the Canadian S&P/TSX index and the American S&P 500.

Note that the S&P/TSX grew just 8% in 2023, compared to 25% for the S&P 500, around 17% for European large caps, and 30% for Japan's Nikkei 225.

The S&P/TSX's “spectacular underperformance” in 2023 suggests investors were already anticipating a potential recession in Canada, says Brian Belski, chief investment strategist at BMO Capital Markets. If the situation recovers quickly, the Canadian stock market could end 2024 with gains “of more than 25%,” he says.

For the average investor, it is generally preferable to invest in diversified funds, especially index funds, to benefit from stock market growth. But I know many of you like to pick stocks for part of your portfolio.

So let's move on to Desjardins and CIBC's nine most popular Quebec titles for next year (in alphabetical order).

1. Alimentation Couche-Tard

Desjardins analyst Chris Li expects strong gasoline margins and cost controls to continue to support Couche-Tard stock. The one-year target is $85, representing a potential gain of almost 10% compared to the current price.

2. AtkinsRealis

“AtkinsRéalis (formerly SNC-Lavalin) remains our preferred stock in the engineering and construction sector due to its large exposure to government clients (which is an advantage when private investment declines), resurgent global interest in nuclear energy and possible sales of non-essential assets and […] due to the fact that the stock trades at much lower multiples than its peers. CIBC's target is $51 and Desjardins' target is $53. AtkinsRéalis shares have gained more than 70% in 2023. The current price is around $42.50.

3. National Bank

CIBC expects banks could face a difficult start to the year before benefiting from the first signs of economic recovery. The only one of the big six Canadian banks on their list is National. His target is $102, which is, however, very close to the Montreal institution's current price ($100.75).

4. Bombers

“We expect Bombardier to benefit greatly from the falling interest rate environment and we see little risk of the stock falling to current levels,” writes Benoit Poirier at Desjardins. The target is $103, almost double the plane maker's current price ($53).

5. Boralex

The projected fall in interest rates should also benefit this renewable energy producer, which also has a large portfolio of projects under development. Boralex appears on the CIBC and Desjardins lists. Desjardins' target is $43 and CIBC's target is $39. The stock is currently trading at around $33.50.

6. CGI

The multinational IT company's stock has gained more than 20% in 2023 and recently hit a new all-time high of nearly $146. Separately, CIBC believes CGI is “well positioned” for acquisitions and expects the stock to reach $155 in 2024.

7. MTY Group

MTY experienced a rather stagnant stock market year in 2023. CIBC believes the restaurant operator still has the ability to reduce its operating costs if the economic environment deteriorates. The target is $71, an increase of more than 26% compared to the current MTY price ($56).

8. Quebecor

The company that owns the Journal is one of CIBC's favorites in the communications sector, along with Rogers and Telus. According to experts at the Toronto institution, telecommunications companies will continue to benefit from immigration and the desire of many consumers to switch to more expensive mobile tariffs. CIBC's target for Quebecor is $38, about 20% more than the company's current price.

9. Savaria

Desjardins expects the elevator maker to make significant progress toward its 2025 financial goals: increasing its revenue from $800 million to $1 billion and its operating margin from 15.5% to 20%. Desjardins estimates Savaria shares could rise more than 30% in 2024.

Analyst recommendations are based on in-depth analysis of company finances and prospects. However, we must never forget that no one is a fortune teller!