Whether you are a career stockholder or a part-timer investor, this quarantine is the perfect window to analyze as many stocks as you can. The in-depth market analysis may help you unearth some investing gems for a longer investment horizon.
I am going to help you in this search and will discuss two potential stocks to buy during this lockdown.
A diversified asset management company
Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM) is an alternative asset management company with its footprint spread across five continents. BAM stands at a market cap of over $65 billion. It covers private equity, real estate, and renewable power. Like any other stock on the TSX, BAM has also plunged in the last month or so.
The economic depression we are going to face for some time in the future could cut the company’s valuation down this year. However, valuing this stock high has many upsides. For starters, BAM stock is supported by strong future fundamentals.
For instance, the majority of BAM’s assets are centered on the real estate and renewables industry. These are not just highly tangible assets but will also hold out through the ongoing market crash and retain value.
Also, Brookfield is one of those TSX entities that is far from any bankruptcy-like situation. As the recession further unfolds, there will be many foreclosed properties and distressed assets that BAM may add to its portfolio.
The stock is trading at 27 times its earnings, which could be considered slightly overvalued. However, a long-term investment in BAM might end up with a winning resolution.
The second-largest bank by market capitalization
Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stands at a whopping $106 billion market cap. The bank is the most geographically diversified among the Big Five, because it is collecting nearly one-third of its earnings from south of the border.
Banks, irrespective of bottom lines, are often the first to feel the heat of a recession. This has happened in the ongoing crisis as well, where bank stocks have slumped more than many other stocks. It is not good news for those who are currently holding bank stocks and looking to sell them soon.
However, a long-term investor can make the most of this situation/opportunity. For instance, TD Bank stock is now trading at less than 10 times its earnings. Usually, its P/E ratio lingers around 11 to 12. It shows that many investors are hesitant to invest in TD stock. You can buy this dip and hedge on the growing retail network of the bank, especially in the U.S., which may help it through this economic downturn.
A good time for making long-term investments
Even before the oil war and COVID-19 struck, there were discussions about a market crash. These two global events have accelerated the slump. However, the downturn has also carved out a window of opportunity for investors to buy the dip for a long-term investment horizon.
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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Brookfield Asset Management. The Motley Fool recommends BROOKFIELD ASSET MANAGEMENT INC. CL.A LV.