If you’re a young investor and reading this article, you’re already on your way to growing your impressive portfolio! I’m going to touch on two stocks I think young investors ought to focus on that are TSX listed. These companies offer excellent long-term upside and are trading at ridiculously cheap valuations right now.
To those who may not be as young: these stocks should work for you as well. Both companies provide very decent dividend yields and are defensive growth options. These stocks are truly well suited to most investor portfolios. That said, I think those with the longest investing time horizons will do the best with these.
In the financial services industry, Manulife Financial (TSX:MFC)(NYSE:MFC) is a top pick of mine right now. Indeed, I think Manulife’s fundamentals make this a screaming buy at these levels. Manulife has a double-digit return on equity, a dividend yield of 5%, and a valuation multiple that is less than three times operating cash flow. This is truly one of the cheapest large-cap TSX-listed companies out there right now.
Additionally, I think Manulife has a growth profile that warrants investment at these levels. Despite concerns about headwinds such as interest rates and investing margins, Manulife has the size and scale to weather these issues. I think there could be a growth-to-value rotation underway in equity markets forming. If we see such a scenario materialize, Manulife could take advantage of significant capital flows to this sector.
One of the best TSX growth stocks trading at a ridiculously cheap price right now is Alimentation Couche-Tard (TSX:ATD.B). Indeed, Couche-Tard is a growth stock that is best suited for those with long-term investing goals. This company has grown organically and via acquisition in recent years. Accordingly, Couche-Tard has become one of the leading global players in the gas station and convenience store segment. Future growth-related acquisitions are supported by a strong balance sheet and plenty of room to pursue targets.
In fact, this week the company announced it was exploring a friendly deal with French grocer Carrefour SA. The US$20 billion proposed deal currently represents a premium of about 30% over and above Carrefour’s current valuation. Right now, there are only discussions happening on this front. As we saw with recent talks and negotiations with Australian company Caltex, and other acquisition targets, deals fall through all the time. We’ll have to wait and see on this one, but I think it could be a great deal for Couche-Tard, if it closes.
This deal has the potential to widen Couche-Tard’s already impressive geographic reach while further diversifying the company’s cash flows streams. I think every investor should consider Couche-Tard at these levels. It’s hard to find this amount of growth potential this cheap in today’s market.
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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends ALIMENTATION COUCHE-TARD INC.