This market crash has been a great time for Canadian investors to buy TSX stocks. Many companies’ valuations have come down dramatically, offering long-term investors an attractive entry point.
But with so many stocks trading undervalue, where should you look to find stocks you want to buy?
The world’s greatest investor, Warren Buffett, has given advice on this before. He’s said that when looking to buy companies, you should always start with your own TSX stocks first. After all, if you wouldn’t be a buyer of the stocks you own today, then you should rethink why you own them in the first place.
Obviously, you may need some diversification or seek to grow the weighting of an industry you may be underweight in. If not, start with your own stocks first.
That’s what I have been doing over the last few weeks. In addition to adding a couple of new businesses that I have been watching for a while, I also doubled down on a few positions.
Consumer defensive TSX stock
The first TSX stock I bought more shares of is North West Company (TSX:NWC). North West owns grocery stores and supermarkets in remote communities in Northern Canada, Western Canada, Alaska and the Caribbean.
Consumer staples are some of the best investments you can own in a recession, and the fact that North West supplies entire communities, gives it an even stronger position.
The defensive TSX stock is a well-run, integrated company that pays a stable and reliable dividend, which is part of the reason why it’s such an attractive business to own ahead of a recession.
And with the discount in the share price, investors can buy North West today and receive a current yield on its dividend of roughly 6%.
In addition, the stock is trading at just 13.2 times its trailing earnings at a share price of just $22.
For me, the discount was too attractive to pass on, and I was happy to increase my position. This gives my portfolio additional stability and increases the total dividend yield. For investors considering a consumer staple TSX stock to buy, I’d definitely recommend North West.
TSX energy stock
With the collapse in oil prices, many energy stocks have become extremely cheap, giving long-term investors a major opportunity to gain exposure.
In such times, I prefer to buy the big blue-chip TSX stocks, which is why I chose an integrated company like Suncor.
These companies tend to trade at premiums during positive economic times, and will be the first stocks to rally when investor sentiment begins to return to markets. Not to mention, Suncor is one of the top businesses in Canada.
While these share prices can be somewhat justified by the current price of oil, the current price of oil is unsustainable. It’s therefore inevitable that Suncor shares should be worth more from here.
If any stock was built to handle a situation like this, it would be Suncor. Its integrated operations and high-quality management combine to make it one of the most reliable energy stocks in Canada.
That’s why I had no problem increasing my position in Suncor. I’m not concerned about short-term issues, and I know long-term the stock is easily worth $40 and can return cash to me in the meantime.
For investors contemplating getting into markets, now is by far the best time to be buying TSX stocks.
Both these stocks are long-term investments for me. The share prices may remain depressed in the short run while markets recover. That’s fine, as I plan on owning these for a long period, possibly forever.
It’s high-quality businesses like these that can execute consistently over the long term. Buy them now while they are still cheap and hold them till they’ve reached their true value.
That’s how to be the most successful when it comes to investing. And until these companies reach their full potential, I’ll continue to look for more TSX stocks to buy undervalued.