What a year it’s been for uncertainty. Tension in the Middle East flared up just as the trade war was ending. And then the coronavirus erupted no sooner than the threat of war had been nipped in the bud. The TSX Index was down 10% at the start of the week. It’s certainly a tough time to stay bullish.
However, great TSX stocks are selling for a fraction of their worth. Contrarians facing the current market therefore have some tempting value opportunities.
A once-in-a-lifetime buying opportunity
Loblaw Companies (TSX:L) raked in $1 billion of online sales in 2019. It’s proven that it can not only compete in, but also dominate the Canadian e-commerce space. At writing, it was still positive in the single digits. Loblaw is a strong all-weather stock.
Its presence in a stock portfolio brings access to consumer staples, medical products, clothing, banking, and the growth trend in online shopping.
A 1.85% dividend yield may not be significantly high among TSX stocks. But a payout ratio of 42% leaves plenty of room for growth. That ratio also suggest that payments will be dependable over time. Earnings per share are projected to continue rising for the foreseeable future.
Loblaw has beaten the retail industry by 52.3% compared to the average of 7% when it comes to 12-month income growth.
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Gold TSX stocks are a solid buy right now
The coronavirus is driving up gold prices to seven-year highs. This not only makes Newmont a buy, but also significantly bolsters the miner’s bottom line. The gold giant also pays a dividend, which will only be further strengthened as rising gold prices drive up Newmont’s profitability.
But there are other reasons to buy Newmont in particular. The stock trades with a discount of around 62% off its fair value. It’s a touch overvalued for the metals sector in terms of assets, with a P/B of 1.8 compared to the average of 1.3.
In terms of its income, though, Newmont’s P/E undercuts the sector average. Newmont is good relative value, with a price-to-earnings of 12.2 compared to 13.3.
There are tried-and-true tested takeaways from past market crashes. The market always comes back. Invest in great TSX stocks for the long-term and you’ll see higher returns.
One way to do this is to see yourself as a stakeholder in the company you’ve bought into. This will help you hold that portfolio through times of stress, rather than trading it. Keeping cash on hand is also smart, as it also allows investors to snap up new bargains.
The bottom line
Loblaw and Newmont are key stocks to buy amid the coronavirus sell-off. Both stocks are diversified and display key defensive characteristics.
The safety of gold and consumer staples adds to a stock portfolio’s long-term strength. Great TSX stocks combine defensive qualities with passive income. They’re a low-risk play for long-term returns, and currently excellent value for money.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Victoria Hetherington has no position in any of the stocks mentioned.