Investors have some strong buys right now. But performance is key; rather than trusting any one sector, Canadians should single out the best names. Today we will take a look at four of the best long-term buys.
The best tech stock on the TSX?
Shopify (TSX:SHOP)(NYSE:SHOP) may not be the best value for money. But looking beyond the current meltdown, this crash-busting name could defy gravity. Indeed, Shopify’s e-commerce model could very well become the number one retail environment of the future. Who wouldn’t want to ride the upside of a platform that could grow forever?
Now look at its performance. Online retail has been given a huge boost from the social distancing market. Just look at its three-month share price gain of 54.5% for an indication of how popular this stock has become. Looking further back, Shopify has rocketed 200% year on year. Although some might say that this stock is overvalued, the sky is the limit for this must-have TSX tech ticker.
What makes Shopify such a strong buy for investors going long on penetrative business models is its twin revenue setup. Shopify merchants are able to subscribe to e-commerce services across platforms, which includes Shopify’s website itself, as well as physical stores (less of a focus right now) and social networks. Then there is the merchant solution stream, which takes in Shopify Pay, Shopify Shipping, and Shopify Capital.
Energy, cannabis, and banking: A very Canadian portfolio
Three other names are a strong buy for the long-term TSX investor. It wouldn’t be a Canadian stock list without at least one cannabis name, and today that name is Village Farms. This is a diversified, reduced-exposure play for marijuana upside, as well as a solid consumer staples pick.
Village Farms is a rare stock indeed, even offering clean energy exposure along with some of the momentum of a cannabis stock.
Fortis is a buy for its dividend payment track record. Passive income investors are currently under advisement that yields could be slashed and payments stopped altogether (not that there was some big announcement). But one by one, dividend stocks have been falling by the wayside, which is why it makes more sense to buy the name rather than the yield.
That said, Fortis has been as strong as its name suggests for 45 years. Granted, this does not extend back to the Great Depression, a period with which our current situation is most closely comparable. Only time will tell whether reduced commercial electricity usage tarnishes the sheen of this great Canadian stock long term. Until it does, this name is a strong wide-moat buy for the defensiveness of energy production.
If you have to own a bank stock, own Scotiabank. Emerging markets are still a key growth area, and Scotiabank delivers. As one of the Big Five, it’s untouchable.
It doesn’t matter what the economy throws at Bay Street’s moneylenders; they won’t be allowed to fail. This means that an investment in a top Canadian bank stock is technically bulletproof. Buy for growth, though, not just stability.
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. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify, Shopify, and Village Farms International, Inc. The Motley Fool recommends BANK OF NOVA SCOTIA.