3 TSX Stocks to Buy When the Market Bottoms

These are the top three TSX stocks to consider buying if the market has another pull back again before we see the full recovery.

Daniel Da Costa

Daniel joined the Motley Fool Canada team in 2019 with years of experience in banking and investing. Growing up the son of a proprietary stock trader and educator, Daniel’s always found joy in helping Canadians to improve their financial situations. With the Motley Fool, Daniel sees an even more rewarding way to impact Canadians positively. A student and great admirer of Warren Buffett, he’s always looking for investments offering growth at a reasonable price. Outside of finance, Daniel enjoys spending his time with family, sailing, and watching Formula One.

Published May 5, 2020 10:51 am EDT

There’s a lot of potential for another market crash in the current environment. Stocks could retest their lows in the coming weeks and possibly go even lower. If this were to happen, there would be some significant deals with numerous TSX stocks.

Already in March, when the TSX hit its low, plenty of stocks were trading at considerable discounts. Since then, stocks have recovered a lot of their losses.

However, if this is all erased in another market crash, investors should be ready to take advantage of the deals as they present themselves.

Here are the top three TSX stocks I’d be waiting to buy when the market bottoms.

Wine producer

Andrew Peller Ltd (TSX: ADW.A) is a great stock for long-term investors. Not only has the company proven to be a successful long-term growth company, but the wine industry in Canada continues to become more popular.

Furthermore, the industry is generally pretty defensive, and with stay-at-home orders, some stores were even seeing volumes that only compare to Christmas.

Andrew Peller also benefits from the fact that it produces wines of all qualities and prices. This way, the company has exposure to every consumer segment.

Recently, the company has used its experience and industry knowledge to expand into ancillary alcoholic beverages as well, introducing products such as ciders and liqueurs, which will only accelerate growth in my view.

Plus, the company has a natural platform to promote all its new products through the various retail stores that it owns.

Even at current prices, I’d say Andrew Peller is a buy, but the stock traded as low as $6.00 in mid-March.

I’d watch this stock carefully because if the market was to crash again and you could buy the stock for $6.00 or below, it would be one of the best discounts on the TSX.

Renewable energy TSX stock

Renewable energy is one of the industries I’m most bullish on long term, and the largest green energy stock on the TSX is Brookfield Renewable Energy Partners L.P. (TSX: BEP.UN)(NYSE: BEP).

The company has more than 9,000 megawatts of generating capacity — considerably more than any of its TSX peers.

Also, 54% of its generation comes from hydro, 30% from wind power, and another 13% comes from solar, giving it considerable diversification. The company is also diversified geographically, operating mainly in Canada, the United States, Latin America and Europe.

Brookfield has more than 12 years of weighted average duration in its power purchase agreements and nearly all of its capacity contracted this year. The long-term contracts and diversification of its assets are crucial in mitigating risk.

The stock is highly reliable and a great long-term investment, so if the market pulls back and you can get it near its 52-week lows, I’d definitely pull the trigger.

TSX gold stock

Gold stocks tend to do well during market crashes and recessions. That said, it’s not unlikely that TSX gold stocks could initially decline during the first stages of a market sell-off. This usually happens as fear causes investors to sell off all assets to raise cash.

However, as the market starts to digest what’s going on, gold starts to appreciate. We already saw this earlier from gold stocks. The iShares S&P/TSX Global Gold Index ETF sold off and bottomed with the rest of the market in early and mid-March. Since then, the index is up more than 100%.

If this pattern were to repeat, I’d use the opportunity to buy a top TSX gold stock such as Equinox Gold Corp (TSX: EQX) as the market was bottoming.

Equinox is a growing gold producer that was already a top growth stock in 2019. The stock began operations in 2018 and has been ramping up production ever since.

In 2019, the share price increased by more than 100%. Plus, there is significantly more room to grow for Equinox.

The company is well run, continues to increase production and has considerably low production costs. With gold prices set to skyrocket this year, Equinox is one of the top TSX stocks to buy.