It’s crucial for all investors to diversify their portfolios to maximize their long-term, risk-adjusted returns.
Accordingly, for investors who are looking to make some small moves right now, I have three excellent options to consider right now. These great options all trade below the $50 mark, making these top picks for even those on a tight budget.
So, let’s get to it.
Enbridge (TSX:ENB)(NYSE:ENB) has been going through a rough patch lately in regards to its pipeline projects. The Biden administration has not been friendly toward oil pipelines, and Enbridge’s expansion projects are now in the spotlight.
However, this stock remains one of my top energy plays due to the stability of Enbridge’s cash flows over the very long haul. Enbridge has obtained long-term, favourable contracts with many of the leading oil-producing companies in Canada. Accordingly, there’s much less risk with a pipeline player like Enbridge relative to pure-play energy producers over the long term.
In my view, this is the most well-managed pipeline in Canada. Accordingly, I think long-term investors seeking defensiveness can’t go wrong with this name.
For those approaching retirement, Enbridge is also a great pick for the income it provides. The company yields more than 7% and is expected to grow its dividend in the 2-3% range over the medium term (and potentially at a higher rate over the long term if it can get its balance sheet situation sorted out).
The digital gaming space appears to have plenty of momentum right now. The pandemic has provided an obvious boost to digital gaming. Accordingly, companies capitalizing on this growth segment are doing very well.
Enter Spin Master (TSX:TOY).
While most investors think of Spin Master as a toy company (and it is), it’s also growing its digital gaming offering in a big way. Its Toca World Life app is taking off, providing the company with triple-digit growth in this sector and some pretty impressive earnings.
Now, this stock isn’t cheap. At 70 times earnings for a toymaker — that’s considered expensive by most historical measures. However, as we’ve seen, Spin Master is more than a toy company. It’s innovating in terms of how it delivers value and growth for investors.
And I like it.
In addition to Spin Master and Enbridge, Alimentation Couche-Tard (TSX:ATD.B) has been a top pick of mine for some time.
Indeed, this company is one that I view as extremely undervalued. It’s trading at only 13 times earnings. Given the fact that the broader market is roughly twice as expensive right now, one could argue this stock has been unfairly discounted.
Indeed, I think there’s room to be optimistic about long-term growth for Couche-Tard. The company is a leader in having a solid M&A strategy fueling high growth in a rather “unsexy” sector. When this company gets back to its acquisitive ways, I think investors will jump aboard.
For now, investors in Couche-Tard need to be patient.
Like these top picks? Here are a few more to consider right now:
Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy TODAY. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you.
Because Motley Fool Canada is offering a full 65% off the list price of their top stock-picking service, plus a complete membership fee back guarantee on what you pay for the service. Simply click here to discover how you can take advantage of this.
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 owns shares of and recommends ALIMENTATION COUCHE-TARD INC, Enbridge, and Spin Master.