2 Stocks to Buy Now on the TSX, 1 to Avoid


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Market corrections can be a blessing and a curse for TSX stock investors. On one hand, many stocks you own have likely lost paper value. As long as you don’t sell, you won’t have a permanent loss. However, even paper losses and seeing red on your investment balance can be unnerving. This is the curse of market corrections.

The blessing is that many high-quality stocks pull back in price and value. Market corrections can be amazing opportunities to buy great businesses at rare, low valuations. These types of stocks are generally quick to rebound when the market recovers, so adding on the dip can be very profitable.

Below are two high-quality TSX stocks that are dirt cheap and look like great buying opportunities. Also, here’s one TSX stock that I would avoid buying, even though it may appear “cheaper” today.

top TSX stock for any portfolio

Brookfield Asset Management (TSX:BAM.A) stock has fallen over 28% in 2022. Today, it trades for 11.5 times forward earnings and 13 times funds from operation per unit. This is the cheapest valuation its stock has traded for in nearly 10 years (other than during the pandemic crash). It trades for a nearly 50% discount to estimated intrinsic value.

Despite that, there are plenty of reasons to like this stock for the long term. Brookfield has a plan to grow from $750 billion of assets under management to $2 trillion in the next five years. That could help grow distributable earnings by a 20% compounded annual rate. If you use the Rule of 72, the stock could potentially double in as little as 3.6 years.

Brookfield plans to spin off 25% of its asset manager before the end of the year. This could be a potential catalyst for Brookfield’s stock to recover closer to its real value.

The most defensive utility stock on the TSX

If you want a safe, reliable income stock, Fortis (TSX:FTS) could be a bargain today. In the past six months, its stock has fallen 18.9%. With a price-to-earnings (P/E) ratio of 17, it is trading near its lowest valuation in a decade. For context, its average P/E is closer to 18.75.

Today, you can buy this stock while it is trading with a 4.3% dividend yield. That is significantly above its five-year average of 3.7%. Fortis is one of the most defensive utilities in North America.

It has a 49-year history of consecutively growing its dividend. For a great combination of value, income, and defensive assets, Fortis looks like a solid buy today.

stock to avoid like the plague

One TSX stock that may be tempting to buy after experiencing a massive decline is BlackBerry (TSX:BB). It is down over 47% in 2022. It got caught up in the Reddit buying frenzy a few years ago, but it has been a poor performer ever since.

While the company always seems to be connected to the latest tech craze (like autonomous driving or cybersecurity), it can never turn its new initiatives into profitability. Revenues have been declining in the past five years, and the company can never seem to turn a consistent profit.

BlackBerry may seem attractive as a “cheap stock” after falling so much. Yet it still trades for a hefty 3.6 times sales and a negative P/E. BlackBerry is one stock that investors are better off avoiding like the plague.

The post 2 Dirt-Cheap TSX Stocks to Buy Now and 1 to Avoid appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Brookfield Asset Management?

Before you consider Brookfield Asset Management, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in October 2022 … and Brookfield Asset Management wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 16 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks * Returns as of 10/19/22

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More reading

Buy the Dip: 3 TSX Stocks to Buy Today and Hold for 3 Years Should You Really Be Buying Stocks Right Now? 2 TSX Stocks That Could Make You Rich for Retirement What’s Going on With Canadian Tech Stocks, Anyway? Better Buy: Fortis Stock or TD Stock?

Fool contributor Robin Brown has positions in Brookfield Asset Management Inc. CL.A LV. The Motley Fool recommends Brookfield Asset Management, Brookfield Asset Management Inc. CL.A LV, and FORTIS INC. The Motley Fool has a disclosure policy.

https://www.fool.ca/2022/10/31/2-dirt-cheap-tsx-stocks-to-buy-now-and-1-to-avoid/

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