The Canadian dollar is cheap (in PPP terms) versus the U.S. dollar. Canada’s banks are strong and more conservative than ours and its government is conservative and sensible. And unlike the United States, Canada is an energy exporter. In fact, Hydro-Quebec is the world’s largest producer of hydroelectric power.

Here then are three top Canadian stocks you should buy now to maximize your returns in 2009.

Top Canadian Stock #1

In a recent interview posted at Kudlow’s Money Politics, Canadian Prime Minister Stephen Harper told readers, “We have, I think, the only banks in the western world where we’re not looking at bailouts… We haven’t got any TARP money… We don’t have a Fannie Mae or Freddie Mac equivalent mucking around in the system.”

See any difference here from the Barney Frank, Chris Dodd, Hank Paulson, Captain Geitner approach?

Bank of Nova Scotia (BNS) is my number-one Canadian bank stock. Founded in 1832, the Bank of Nova Scotia got off to a rough start. None of the board members really knew anything about banking, and the man chosen to manage the bank swindled it to the tune of C$315,000. Not a small sum in 1844. But Bank of Nova Scotia bounced back.

Today, Bank of Nova Scotia is one of Canada’s “Big 5″ banks. For 2008, Scotia Capital, Bank of Nova Scotia’s investment banking arm, was named Best Investment Bank in Canada and Best Investment Bank globally in the infrastructure sector by Global Finance magazine.

Buy Bank of Nova Scotia below trend.

More..

Investors should buy the Canadian dollar against the greenback because the country’s fiscal position is better than the U.S. and oil prices may rise to support the currency, Citigroup Inc. said.

Canada’s dollar, which recently touched the lowest in more than four years, “overshot fundamentals,” Citigroup currency strategist Todd Elmer in New York wrote in a note. He took a “short position” in the U.S. dollar at $1.2975, predicting it will depreciate against Canada’s currency to about $1.24.

“Fiscal and financial-sector strength in Canada provide a strong foundation even as the Bank of Canada moves towards quantitative easing,” Mr. Elmer wrote. “Basing in commodities prices and stabilization in the flow of economic data could act as an immediate catalyst for Canadian dollar appreciation.”

A short position is a bet that a currency will fall. Quantitative easing is when a government prints money to increase liquidity and stimulate credit.

The Canadian dollar, known as the loonie, fell 0.9% to $1.2985 per U.S. dollar at 3:16 p.m. in Toronto, from $1.2871 on March 6. It touched $1.3064, the least since Sept. 2, 2004, when it hit $1.3088 on an intraday basis. One Canadian dollar buys 77.01 U.S. cents.