It’s nearly impossible to predict how the stock market will behave a day, a week, or a month from now. Thanks to technology, instant communication, and social media networks becoming more potent channels of “news” than actual news channels and papers, the market sentiment has become more “dynamic” in the last decade.
But experts might be able to predict (with relative accuracy) which market we will see in the near or far future — i.e., a bull or a bear market. Right now, we are in the bull market, and if the sentiment holds, we might stay in it for a while. If history repeats itself, we might even see decade-long growth before a significant correction.
If you agree with that premise, there are three stocks that you might want to consider.
A mobility technology company
Mobility technology is a fancy way of saying that Magna International (TSX:MG)(NYSE:MGA) is a futuristic automobile manufacturing company. The roots of this Toronto-based company can be traced back to 1957 when its founder started an investment company out of a garage. Now, it has a market capitalization of $34.66 billion and 71,000 employees in North America alone.
The company is investing quite heavily in AI and might have a strong future in the coming years when self-driving cars start entering the mainstream market. The company already has a decent growth history, as evident from its 10-year CAGR of 19.59%. It also has a reliable dividend history, and it’s a Dividend Aristocrat with over 11 years of dividend increases under its belt. The current yield is about 2%.
A recreational product company
The combined effect of a recovering economy and a bull market might have the potential to push recreational stocks like BRP (TSX:DOO) through the roof. The stock has already seen a decent 2021, and has grown over 16% since the start of this year. From its crash in March 2020, the stock has risen about 390%, and even though it’s overpriced, the price-to-earnings ratio of 40 is relatively tame for a company that saw this growth level.
BRP only has one major liability — i.e., its weak balance sheet. Other than that, the company is doing quite well. The revenues have recovered since 2020’s last quarter, and if this vacation season is anything like the pre-pandemic ones, the company might see its recreational products sales sustain or even soar. It also offers dividends at a very modest 0.49% yield.
An insurance company
Intact Financial (TSX:IFC) is another company that saw a decent recovery run after the market crash, and despite a decent growth history, it’s not too overvalued. If the company is going to keep growing at its current rate or (hopefully) an expedited pace, you might want to consider it for your bull market portfolio.
The company has a 10-year CAGR of 15.3% and offers a modest yield of 2.34%. Neither of the numbers makes it a rock star, but it’s a stable company with decent growth potential. The balance sheet is strong, and the revenues are consistently growing, making it financially sound enough to sustain its future growth.
If we are entering a bull market, your goal should be to find and add companies with long-term growth prospects to your portfolio. The days of the rapid after-crash recovery might be behind us, so you should try to prepare a portfolio that can make you rich and help you reach your investment goals slowly and gradually.