Rapid upside was one of the surprise benefits of last year’s roller coaster of a market. But for investors with a lower threshold for risk, reliable growth was less easy to come by. While 2021 isn’t expected to be as volatile as last year, some big challenges to investors remain. Matching growth to predictability is therefore key for portfolio holders focused on lowering risk. From gold to finance, the following stocks could see steady growth in an uncertain market.
Taking out insurance on your stock portfolio
Intact Financial (TSX: IFC) could have 30% if its high price target materializes. Selling at 30% off its fair value, but with earnings growth potential of 26%, Intact Financial is poised for a comeback. While its share price has exhibited very little momentum in the last 12 months, the next five years could see Intact Financial shareholders enjoy total returns of almost 100%.
Of course, this could prove something of a conservative estimate. While a recovery looks to be baked into the markets at this point, the potential for a recovery in insurance could nevertheless turn top names into multibaggers. As with the rest of the TSX, Intact Financial suffered a catastrophic March selloff. Not that you’d know from its perfectly flat 12-month average, though. That’s because Intact Financial steadily recovered since then.
Speaking of financial services, there’s not much wiggle room in goeasy’s (TSX: GSY) targets. With a low consensus of $82 a share, and a high of $110, goeasy is priced right at $96. However, analysts are still giving goeasy a moderate buy signal. The financial services stock could benefit from a protracted pandemic, however, if an emphasis on alternative financing predominates. An optimistic reading sees goeasy raking in around 450% shareholder returns by 2026.
Diversifying in low-risk assets
Throw in its small dividend, and total returns could hit almost 520% in that time frame. Indeed, the growth thesis for alternative financing is looking increasingly pertinent in the pandemic market. From installment loans to leasing agreements for household goods, goeasy is well placed for a credit boom. With economic uncertainty ratcheting up, such outfits are likely to find themselves relevant in the months and years to come.
The gold growth thesis still throws up some intriguing momentum plays. Roxgold (TSX:ROXG) sells at $1.60 a share. If analysts have got it right about a high target of $3.50, this name could have around 120% upside. Total returns to shareholders by mid-decade could be of a similar order of magnitude. Debt to equity is low at just 0.24, denoting an overall healthy stock.
In fact, for a small-cap gold pick, Roxgold benefits from a reassuring spread of positive characteristics. From that squeaky-clean balance sheet to a sleep-easy track record, this overlooked gold stock could make a low-risk addition to a growth portfolio. Mid-term capital gains investors could find that they have a ready-made upside generator in Roxgold.
For a risk-lowering growth strategy, consider stashing value gold shares in a portfolio alongside beaten-down names with comeback potential. This year is likely to see a reversal of some of the more destructive trends of 2020. This could see sudden growth from embattled financials.
