Written by Christopher Liew, CFA at The Motley Fool Canada
The TSX had a magnificent bull run in 2021 – a year that investors believed to be a post-COVID year. Unfortunately, a new variant of the coronavirus dashed hopes of a stronger end than the post-financial crisis of 2009. The index lost 35.03% in 2008, then rebounded in 2009 to deliver an overall return of 30 , 69%.
The major Canadian stock market did not lose in 2020 and generated a total return of 2.17%. On November 16, 2021, it posted a new record high of 21,786.50, a gain of 24.87% since the start of the year. The TSX looked set to match, if not beat, its 2009 performance until it fell 6% 10 days later on Omicron fears.
As of December 22, 2021, the gain since the start of the year is 20.86%. Ten of the 11 primary sectors are in positive territory, with energy (+ 76.98%), real estate (+ 30.93%) and finance (+ 30.15%) being the top three. Health, the worst performing, is down 19.97%.
If you are looking to invest in the largest Canadian companies listed on the stock exchange by market capitalization, Shopify (TSX: SHOP) (NYSE: SHOP) and Royal Bank of Canada (TSX: RY) (NYSE: RY) are the two main components. Toronto-Dominion Bank, Brookfield Asset Management, and Canadian National Railway round off the first five.
The tech phenomenon Shopify has a market cap of $ 223.15 billion at the time of writing. The ecommerce platform was on all three TSX30 lists, ranking second in 2019 and 2021. It was number one in 2020, when technology was the winning industry. However, the sector is only the sixth best performer (+ 16.04%) this year.
Shopify has rewarded investors with a total return of 967.77% (119.89% CAGR) over the past three years. Today, the tech stock is trading at $ 1,776.77 per share, up 23.61% year-to-date. The provider of modern trade tools for traders posted strong results in the third quarter of 2021, but expects the fourth quarter to contribute the largest share of the year’s revenue.
Harley Finkelstein, president of Shopify, said entrepreneurs around the world are embracing a future in which retail happens everywhere. However, next year should be a litmus test, as we’ll see how the stock performs in a period of prolonged inflation.
The 12-month average market analyst price target for Shopify is $ 1,965.84 – upside potential of 10.65%.
Buy and keep
Canada’s largest bank is a solid investment choice regardless of the economic environment. RBC has outperformed the TSX and Shopify this year with its 31.44% gain since the start of the year. Additionally, at $ 132.59 per share, you can participate in the 3.65% dividend. Between Shopify and RBC, I prefer to buy bank stocks for safe, recurring income streams.
The bank’s 151-year $ 185.36 billion dividend history shows you can invest in RBC today and never sell again. In fiscal 2021 (fiscal year ended October 31, 2021), revenue increased 5.3% to $ 49.69 billion from fiscal 2020. Net income increased by 40.33 % year-on-year to $ 16 billion.
Dave McKay, CEO of RBC, notes the high growth in client activity across all of the bank’s businesses. He added that the overall performance in 2021 reflects strong earnings and premium shareholder performance. In addition to announcing an 11% dividend hike, RBC plans to repurchase up to 45 million of its shares.
Another nice finish in 2021
The TSX is unlikely to post a new all-time high with only a few trading days remaining. Still, investors should be happy with the overall gain in 2021 compared to 2020.
The post The TSX Won’t End 2021 stronger than its post-financial crisis performance in 2009 first appeared on The Motley Fool Canada.
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Foolish contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns and recommends Shopify. The Motley Fool recommends Brookfield Asset Management Inc. CL.A LV and Canadian National Railway.