The rest of the year may see turbulence in the stock markets, with an increasingly uncertain global economy fuelling investor fear. A greedy start to the year — the result of a jubilant resurgence that followed the “Christmas massacre” on the markets — is likely to give way to widespread and persistent volatility. It’s time to know what you hold and adjust in case of a downturn, while making secure investments like the following two stocks.
Lundin Mining (TSX: LUN) is one of the best diversified metals and mining stocks on the TSX index at present, with base metals mining operations in South and North America, Portugal, and Sweden, with a focus on copper, nickel, and zinc production. Lundin Mining also holds an indirect 24% equity stake in Freeport Cobalt Oy, including a cobalt refinery in Finland. It’s still hungry for acquisitions too and will acquire Chapada Copper Mine in Brazil, expanding its diversification.
Down 5.84% in the last five days, Lundin Mining currently presents as a value opportunity in a healthy stock. A positive track record is shown by five-year average past earnings growth of 23.9%, while a healthy balance sheet is illustrated by debt of just 1.8% compared to net worth.
Copper stocks have to be one of the best defensive areas of the TSX index at the moment. Rising prices for the metal are encouraging big players in the mining sector to make new deals, boosting related stock. Indeed, with sustained bullishness reflected in ongoing growth in copper prices combining with a slowdown in investment in new mines and exploration, this metal could be turning into a strong long-term investment.
Laurentian Bank (TSX: LB) (or Banque Laurentienne du Canada, as it’s known to many in Quebec) is a seasoned financial institution that set up shop way back in 1846. While it operates across Canada, the banker is perhaps best known for serving retail clients through its branch network centred in Quebec.
With five-year average past earnings growth of 14.3%, Laurentian Bank is also known for its expertise with small- and mid-sized enterprises and real estate developers, making its stock a play for those industries. Laurentian Bank’s subsidiary B2B Bank is a major banking products and services provider, while Laurentian Bank Securities provides brokerage services to institutional and retail investors.
Despite being technically overvalued by $5 a share, Laurentian Bank can boast a string of pleasingly low market ratios and pays a large and stable dividend yield of 6.21%; meanwhile, a 9.2% expected annual growth in earnings is appropriate for the banking industry. This combination of defensive positioning within the Canadian financials landscape, high dividend, and projected growth make for a stabilizing and potentially lucrative long-term investment.
The bottom line
Given the bullishness in copper, as well as the growing demand for electric vehicles, Lundin Mining is in a strong position at the moment and offers TSX index investors a defensive long-term strategy. Undervalued by more than $22 a share, Lundin Mining is trading close to its book value, pays a dividend yield of 1.66%, and is looking forward to an expected 27% annual growth in earnings.
