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Five Canadian companies cracked RBC Capital Markets’ list of Top 30 Global Ideas for the fourth quarter of the year.
The list, which RBC updates on a quarterly basis, features long-term names “built around bottom-up best ideas that we also view as offering attractive positioning in the current environment.”
Cameco (CCO.TO)(CCJ) was the only Canadian company that was newly added to the list this quarter. RBC analyst Andrew Wong says the company “is well-positioned to benefit from a renewed focus on nuclear energy, especially as a Western-based producer in a market shift towards security of supply.” Cameco shares are up about 16 per cent year-to-date.
“Additionally, we think Cameco has the right mix of assets to meet the coming market needs: proven uranium production with upside, conversion capacity, potential long-term enrichment technology, and nuclear services through Westinghouse,” Wong wrote.
Cameco joins four Canadian firms already on the list, including Alimentation Couche-Tard (ATD.TO), Canadian Natural Resources (CNQ), Constellation Software (CSU.TO), and Telus (T.TO)(TU).
Couche-Tard has been in the headlines recently over a bid for the Japanese parent company of the 7-Eleven convenience store chain. The proposed combination, which analysts expect will likely face scrutiny from regulators in the United States where the two companies operate many neighbouring stores, would create the largest convenience store player in the U.S.
While the potential acquisition was not included in the forecast, RBC analyst Irene Nattel says the company has multiple avenues for growth, despite a challenging macroeconomic backdrop.
Canadian Natural Resources was also on the list, due to what analyst Greg Pardy says was the company’s “superior free cash flow generative power,” its management committee structure – the company does not have a CEO – and its target of allocating free cash flow for dividends and share repurchases.
Software company Constellation Software also made the list, with RBC’s Paul Treiber writing that the company “is likely to generate one of the highest returns for shareholders over the long term in our coverage universe.” Constellation Software is a serial acquirer of other firms. RBC says Constellation, in its 2023 fiscal year, spent a record $2.46 billion on acquisitions, compared to $1.69 billion in fiscal 2022, and $1.36 billion in fiscal 2021.
Telus rounded out the five Canadian firms, remaining on the Top 30 list even amid a challenging time for the broader telecommunications sector. While the stock is down about five per cent year-to-date, RBC analyst Drew McReynolds expects Telus “to deliver industry-leading underlying growth and capital returns.”
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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