After the rally in TSX stocks over the last few months, there aren’t that many stocks that are undervalued. This doesn’t mean there aren’t great opportunities, but you really need to search for the stocks that will break out next.
This is unlike just a few months ago, when investors could buy almost any high-quality business that wasn’t being heavily impacted by the coronavirus pandemic.
Today, almost every stock that seems like it’s a good deal will have a massive amount of risk that comes with it, rendering that price to be fair in a risk-to-reward relationship.
The most important thing that investors understand is that these investments are for the long term.
So, although it may not be a stock that’s at its 52-week high, there is a possibility if the market crashes again soon, the stock could decline first.
For this reason, investors must have a long-term mindset and understand they are buying these stocks because they will be worth substantially more down the road.
TSX growth stock
The first stock I would recommend to investors is Andrew Peller (TSX: ADW.A). Andrew Peller is an extremely high-quality stock, so I can’t figure out why it remains 35% off its pre-pandemic highs.
Perhaps it’s due to the risk investors see after some of its business segments were impacted by the pandemic. Sales to restaurants and the hospitality tours at its wineries have been impacted the most.
However, its retail and wholesale segments have picked up and offset most, if not all, of the lost revenue from the other segments.
Also, Andrew Peller is a top long-term growth stock. The company has made countless high-quality acquisitions as well as implemented brilliant growth strategies to continue to expand the business.
One of those strategies, owning its own retail stores in Ontario, has paid off handsomely, especially during the pandemic.
And as things get back to normal, look for the stock to continue to grow in price as well as increase its dividend.
That dividend yields roughly 2.25% today — an attractive rate for a high-growth TSX stock.
TSX gold stock
Another stock to consider buying today would be a company such as B2Gold (TSX: BTO)(NYSE:BTG).
In this economic environment, you can’t go wrong owning some exposure to gold prices, and high-quality TSX gold stock B2Gold is one of the best ways to do it.
In the last 12 months, gold prices are up by roughly 25%. This is a major increase for gold prices, especially in such a short amount of time. And it’s likely this is just the beginning, as more and more governments print an unprecedented amount of money.
B2Gold has taken advantage, and shareholders have taken notice. The stock is up by roughly 75% over the same period.
The main reason for this is the superior leverage of B2Gold’s operations. Because it’s a high-quality, low-cost producer, the company sees a major increase in its profits as gold prices rise.
B2Gold’s 2020 guidance has the company producing just under one million ounces this year at cash costs as low as just $425.
Plus, with the increase in free cash flow in the last few years, the company has essentially eliminated all its debt and now pays a dividend.
This goes to show how strong B2Gold’s operations are and why it’s one of the best-positioned gold stocks on the TSX.
Bottom line
If you are looking to buy TSX stocks today, these are two of the highest-value picks. Both are high-quality stocks capable of weathering this pandemic. And, most importantly, both are extremely cheap.
