My 3 Favourite TSX Mid-Cap Stocks for October 2023

Mid-cap stocks have a market capitalization between $2 billion and $10 billion. These companies offer higher-growth prospects than large-cap stocks and are less riskier than small-cap stocks. So, investors can enjoy the best of both worlds. With equity markets turning volatile, these three mid-cap stocks could outperform.


Keyera (TSX:KEY) is a midstream company that engages in processing, storing, transporting, and marketing natural gas and natural gas liquids. Despite the volatility in the broader equity markets, the company has returned over 14% this year. Solid quarterly performances and the raising of its 2023 guidance have supported its stock price growth.

The company operates a regulated business, with around 66% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) generated from fee-for-service or take-or-pay contracts. With oil trading at elevated levels, oil production will remain higher, thus driving the demand for the company’s services. Besides, its marketing segment could also benefit from higher commodity prices.

Meanwhile, the company recently completed the KAPS (Key Access Pipeline System) pipeline project, which will transport 350,000 barrels per day of NGLs (natural gas liquids) from the Montney and Duvernay basins to its liquids processing and storage hub in Alberta. Also, the company is constructing other projects, which could become operational over the next three years. With these growth initiatives, Keyera’s management expects its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) to grow at an annualized rate of 6-7% through 2025. So, I believe its future dividend payouts are safer.

Keyera’s management has raised its quarterly dividend by 4.2% to $0.50/share, with its forward yield at 6.17%. Given its healthy growth prospects, high yield, and NTM (next 12 months) price-to-earnings multiple of 16.6, I believe Keyera would be an excellent buy right now.


Second on my list would be Nuvei (TSX:NVEI), which processes digital payments. It also helps its clients to accept next-generation payment methods, thus driving their businesses. This year, the company has been under pressure amid weak quarterly performance and a lowering of its 2023 guidance.

However, the payment processing company’s long-term growth prospects look healthy amid the increasing popularity of digital tools. Meanwhile, the company looks to strengthen its global presence by opening a new office in China. This office will help expand its service across the Asia-Pacific region. Besides, the company is developing innovative product offerings and expanding its APM (alternative payment methods) portfolio, which could boost its financials in the coming years.

Amid the recent steep correction, Nuvei’s NTM price-to-earnings multiple has declined to 8.6, making it an attractive buy.


My final pick would be AltaGas (TSX:ALA), an energy infrastructure company with a strong presence in midstream and utility businesses. During its second quarter, the company deployed $198 million to upgrade its infrastructure, which would improve safety and reliability and also help in adding new customers. Further, the company has signed a contract to acquire Pipestone Natural Gas Processing Plants and Dimsdale Natural Gas Storage Facility from Tidewater Midstream and Infrastructure. These acquisitions could expand its footprint in Alberta Montney, thus strengthening its midstream value chain.

Besides, the company focuses on lowering its debt levels amid a high-interest rate environment. At the end of the second quarter, the company’s net debt stood at $7.7 billion compared to $9.3 billion at the end of the previous year. Given its solid underlying businesses and healthy growth prospects, I believe the uptrend in AltaGas’s financials will continue. ALA pays a quarterly dividend of $0.28/share, with its forward yield at 4.41%. Also, the company’s valuation looks attractive, with its NTM price-to-earnings multiple standing at 12.2.

The post My 3 Favourite TSX Mid-Cap Stocks for October 2023 appeared first on The Motley Fool Canada.

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* Returns as of 10/10/23

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Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nuvei. The Motley Fool recommends Keyera. The Motley Fool has a disclosure policy.