Written by Rajiv Nanjapla at The Motley Fool Canada
The Canadian equity markets have come under pressure in recent days, with the S&P/TSX Composite Index retreating 2.5% from its recent high. Concerns over persistent inflation, restrictive central bank monetary policies, softer commodity prices, and a sell-off in technology stocks have weighed on investor sentiment, dragging the broader market lower. Despite this recent weakness, the S&P/TSX Composite Index remains up approximately 9.5% year to date.
Against this uncertain backdrop, I believe the following two Canadian stocks are well-positioned to outperform this year, supported by resilient business models, strong financial growth, and clear growth prospects.
Savaria
Savaria (TSX:SIS) provides a broad range of accessibility and mobility solutions for individuals with physical limitations. Leveraging its extensive manufacturing footprint and established global distribution network, the company markets its products and services worldwide.
In the first quarter, Savaria delivered solid financial results, with revenue rising 7%, driven by 5.7% organic growth and an additional contribution from acquisitions. Its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) increased 18.5%, while the adjusted EBITDA margin expanded by 190 basis points to 20.4%, highlighting the benefits of operational improvements and scale.
The company also strengthened its balance sheet by reducing net debt by 6.7% to $178.7 million, while lowering its net debt-to-adjusted EBITDA ratio to 0.92 from 1.03 a year earlier. Meanwhile, Savaria ended the quarter with $324 million in available funds, providing ample flexibility to support future growth initiatives and acquisitions.
The long-term favourable demographic trends should continue to support demand for accessibility and mobility solutions as populations age across developed markets. To capitalize on this opportunity, Savaria is investing in product innovation, expanding manufacturing capacity, improving operational efficiency, and pursuing strategic acquisitions to broaden its market presence.
Reflecting these opportunities, management expects revenue to reach $1.6 billion by 2030, representing an annualized growth rate of roughly 12%, while maintaining an adjusted EBITDA margin above 20%. Despite these healthier growth prospects, the stock trades at just 19.8 times analysts’ projected earnings for the next four quarters and offers a monthly dividend with a forward yield of 2%, making it an attractive buy right now.