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Forget the Election: Pay Attention to These TSX Stocks

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Over the last week, the U.S. election has taken up a lot of news. This is understandable, of course, as the election is one of the most important events every four years. So, it’s natural that even TSX investors were waiting anxiously to see who would win the presidency and how stocks would react.

Now that the election has been called in Joe Biden’s favour, investors will undoubtedly be repositioning their portfolios this week.

However, there is more major news coming out daily that will impact investors far more than who the president will be. I’m talking about the all-important earnings season we are right in the midst of.

Since earnings season began a few weeks ago, several TSX stocks have been reporting earnings, and there have been some major surprises.

This earnings season is one of the most important in a long time too. This is because, for most companies, it was the chance to open back up and try to bounce back from the initial impacts of the pandemic.

So, on top of seeing how the company performed, it’s also going to be crucial to see what management has to say about how the company is positioned and where it’s going in the future.

Here are two stocks that offer investors major potential after reporting earnings.

TSX energy stock

TSX energy stocks have been hammered this year. Energy is one of the worst-performing industries in 2020. The coronavirus pandemic has been awful for oil-producing companies, as demand has been impacted considerably.

Thus, almost all energy stocks should be avoided at the moment until there is more clarity on the outlook for the sector.

Despite that, one company that’s a screaming buy is Enbridge (TSX:ENB)(NYSE:ENB). Enbridge hasn’t posted stellar results like some other TSX stocks. However, what’s impressive about Enbridge is how resilient it’s been.

One of the biggest headlines of Enbridge’s earnings report was that management once again reiterated guidance for distributable cash flow per share.

It’s also attractive that Enbridge has been buying back a tonne of shares at this ultra-cheap price. This is something management said will continue if the share price continues to trade at this massive discount to fair value.

The company is seeing an impact from the pandemic. However, in its third-quarter earnings release last week, its earnings before interest taxes, depreciation, and amortization (EBITDA) were down just 4% year over year.

The energy giant is one of the most resilient stocks you can count on, which means this valuation is an excellent buying opportunity. Plus, as of Monday’s close, the dividend was yielding more than 8.5%, making Enbridge one of the cheapest stocks on the TSX.

Real estate stock

Another top TSX stock for investors to consider is First Capital REIT (TSX:FCR.UN).

First Capital is a mixed-use real estate company; however, a significant portion of its properties are in the retail sub-sector. As most investors know by now, retail has been one of the worst-hit subsectors of real estate.

All of the shutdown orders and limitations on gatherings as well as an economy that’s suffering have weighed on retail merchants. So, it’s natural that the landlords will experience some pain as well, as bad debts expenses increase.

First Capital, however, is way too cheap. It currently trades roughly 35% off its 52-week high. This is in contrast with its business operations, which, at most, are being impacted by 20%.

The TSX stock still has an occupancy rate above 96%, a robust development pipeline, and a solid financial position, reducing risk for investors.

In addition, it pays an attractive dividend, which currently yields 5.8%.

Bottom line

Both Enbridge and First Capital represent some of the most attractive long-term TSX stocks to buy now. Both companies are dominant in their industries, have resilient operations, and are trading extremely cheap compared to their fair value.

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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 Daniel Da Costa owns shares of ENBRIDGE INC. The Motley Fool owns shares of and recommends Enbridge.

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