The market has been busy over the last few weeks. Joe Biden was announced as President-elect, multiple vaccines released promising results, and the coronavirus pandemic has been surging in many parts of the world. With all that’s going on, investors are rebalancing their portfolios significantly, causing many TSX stocks to rally.
Anytime there are big market catalysts like this, and several TSX stocks are rallying, there’s a tonne of opportunity for investors — not only because there is a tonne of momentum in markets, but also because many value stocks are now rallying rapidly.
However, in addition to many high-quality stocks rallying, often lower-quality stocks may participate in the rally too as investors get caught up in the euphoric moment. So it’s crucial that you make sure you’re buying a solid company first before you even consider how much value its shares have.
Here are two of the top TSX stocks rallying lately that you may want to buy soon because if you wait too long, you may miss out on their value completely.
TSX real estate stock
The first stock that has seen a major rally in the last few weeks is InterRent REIT (TSX: IIP.UN).
InterRent is a generally defensive business. However, it’s also been a great growth company, which gave the stock a nice premium.
That premium in the stock price has eroded throughout the pandemic, though. So while residential real estate is a highly defensive industry, the TSX stock has struggled more than some would expect. Now, however, as optimism is returning to markets, high-quality growth stocks like InterRent are starting to see premiums again.
That’s why the stock has been rallying so much lately and why if you have been considering an investment, you better do it soon.
Up until 2020, InterRent had posted incredible growth. In the three years leading up to 2020, InterRent grew its stock price by 112% or a 28% compounded annual growth rate. And if you go back even further, the numbers only get more impressive. The five years leading up to 2020 saw the stock price increase by 152% and from 2010 to 2020 a more than 900% gain.
InterRent has achieved this growth time after time. The top TSX stock has proven that its model of buying undervalued buildings in need of an upgrade and renovating them to grow its unitholder value provides exceptional returns.
So as the market and economy are now on their way to recovery, InterRent looks poised to continue with that impeccable long-term growth.
Small-cap growth stock
Another high-quality stock that only continues to get more expensive is Andrew Peller Ltd (TSX: ADW.A). Andrew Peller stock has been rallying consistently, up 20% over the last three months.
The alcoholic beverage maker with major domestic market share in Canada has handled the coronavirus pandemic exceptionally well, yet the TSX stock is still trading more than 10% off its 52-week high.
Andrew Peller supplies a tonne of Canadian restaurants, so there was fear that the lockdowns would impact sales quite considerably. However, the business also has a retail side of the business, which has been a big help in offsetting some of the lost sales from its other segments.
In fact, both revenue and earnings have actually grown through the pandemic. This is extremely promising for Andrew Peller, especially given all the organic growth potential the company has, as it starts rapidly launching new drinks through its network of retail stores.
While it doesn’t boast the same past performance as InterRent, over the last decade, investors have still seen a more than 500% total return. And with the TSX stock being a small-cap still worth less than $500 million, there’s huge room for growth over the next decade.
Bottom line
Several TSX stocks have been on significant rallies lately. However, it’s not about what these stocks do today. It’s about how they perform over the long-term.
So make sure you focus on buying high-quality stocks, like the two listed above. But do so soon, or you’ll have to pay a lot more for the shares.
