Financial markets are continuing to decline. Investors looking for long-term value at very reasonable prices are finally getting what they’ve wanted. Valuations on many high-quality names are getting a lot closer to their book values and valuations we haven’t seen in a very long time. Here are three excellent long-term picks for eager investors willing to load up.
Enbridge
As far as long-term buy-and-hold opportunities go, Enbridge Inc. (TSX: ENB)(NYSE: ENB) has proven to be a tremendous performer historically. Enbridge has built its energy infrastructure portfolio into a massive assortment of critical assets. This would indeed be very difficult, if not impossible to replicate today (much in the same way as railroads). For these and other reasons, Enbridge has remained one of my favourite top picks over the years.
The stock price of Enbridge and other pipeline/energy infrastructure companies have been hit particularly hard in recent months. This is not necessarily due to the plunging oil price, directly. Most pipeline companies like Enbridge have volume contracts that are not directly linked to the price of oil. This provides some top and bottom line stability.
In fact, energy infrastructure companies have been hit hard due to indirect counterparty risk related to oil producers’ ability to pay and/or keep certain covenants of various transportation contracts. I think these concerns are certainly real in the short term. However, I would direct investor attention to the relative strength of Enbridge’s balance sheet and the company’s long-term capital growth plan. Long-term catalysts will help this company not only survive, but thrive over the medium and long term.
CT REIT
Most real estate investment trusts (REITs) have been hit hard by recent market shocks. Even low interest rates (which have dropped even further) have not prevented this. Financial markets are continuing to assess the potential vacancy rates many REITs could see in a post-coronavirus world, should the expected numbers of defaults materialize.
This widespread fear has led to a situation for long-term investors to purchase units of CT REIT (TSX: CRT.UN) at a substantial discount. This REIT’s core holdings are primarily stand-alone Canadian Tire retail locations. Therefore, unless you believe there is substantial counterparty risk of Canadian Tire permanently closing stores, then this REIT is a golden opportunity right now.
Canada Goose
This is perhaps my “high-risk, high-reward” pick of the bunch. Luxury brands like Canada Goose (TSX: GOOS)(NYSE: GOOS) have seen sales decline dramatically. This is largely the result of Chinese demand drying up due to the impact of coronavirus. For those who are banking that the Chinese economy will rev up soon, this is a stock that could really pop. I, myself, am of the opinion that these are just near-term headwinds that will soon abate. Canada Goose appears to have a very solid foundation for long-term growth as a truly global brand. I would slowly ease into this one, as we don’t know how quickly China’s economy will recover.
Stay Foolish, my friends.
