Forget Recovery Stocks: Long-Term Investments Are the Best to Buy Now

These days, all the best stocks have already recovered or are well on their way. So, instead of recovery stocks, here’s what stocks I’d buy today.

| More on:
investment research

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Over the past year, investors have had a great opportunity to find plenty of stocks trading undervalued. Today, though, stocks are basically back at full value. This will inevitably make it a lot more difficult for investors to decide which stocks they want to buy.

There are a select few stocks that are still undervalued. The majority of businesses now, though, are back to their pre-pandemic prices, and the companies are focused on life after COVID-19.

The past 14 months may have been filled with opportunity, but investors can’t get used to these easy capital gains forever. Now that most stocks are back to their fair value, it’s much more important to focus on the long term.

And while you should have already been buying stocks for their long-term potential, a lot of what’s attracted investors recently are the short-term recovery potential of stocks. With that now essentially non-existent for most stocks, though, it’s all about investing for the long term.

Always invest for the long term

Because many stocks have recovered, you may think there aren’t many stocks to buy now. On the contrary, though, several top Canadian stocks offer a compelling opportunity today.

When looking for long-term stocks, it’s always important to remember that first and foremost, you want stocks that are high-quality and highly resilient.

Over 30 years ago, Warren Buffett famously said there are two rules for investing: “Rule number one, don’t lose money. And rule number two, never forget rule number one.”

He goes on to explain that if you buy the best businesses and can stay disciplined and hold them for the long term, it’ll be nearly impossible to lose money over time.

Avoiding losing money is crucial, because it’s a lot easier to grow your portfolio consistently rather than having a poor-performing year and then trying to offset it with a wildly impressive year.

With that in mind, here is one of the top Canadian stocks I’d buy for the long run today.

A top long-term stock to buy now

Several Canadian stocks offer attractive buying opportunities today. However, one of the very best has to be Northland Power (TSX:NPI).

Northland Power is a stock with great promise over the next few years. There is a tonne of growth potential in the renewable energy sector, and Northland is one of the top growth stocks in the industry.

The stock was already worth a buy a few weeks ago, but with the small selloff in the stock over the last few weeks, investors can get an even better deal buying the stock today. At roughly $39 a share, the stock now trades 30% below its consensus analyst target price of nearly $53.

Plus, not only has it been a top growth stock in the past, as I mentioned, but it has one of the most aggressive strategies for growth over the next few years. The company is planning on investing up to $20 billion over the next five years.

This capital will go towards growing Northland’s operations through acquisition, as well as funding organic growth projects. It’s planning to diversify, too.

While most of its portfolio will continue to be renewable energy generating assets, the company will also look to add some utility businesses for stability. It also said it would look to acquire ancillary renewable energy businesses, such as cleantech companies for their growth potential.

And to add to all the growth it offers, the renewable energy stock also returns cash to investors with its 3% dividend yield.

So, if you’re looking for stocks to buy now, I’d focus on buying the best stocks for the long term. And if you’re looking for a top long-term growth stock, Northland is one of the very best in Canada to buy today.

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 Daniel Da Costa owns shares of NORTHLAND POWER INC.

More on Dividend Stocks

edit Back view of hugging couple standing with real estate agent in front of house for sale
Dividend Stocks

Why Real Estate Stocks Are a No-Brainer Addition to Your Portfolio

Real estate stocks, especially REITs, offer some distinct advantages over other types of stocks, making them must-have additions to most…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Top TSX Dividend Stocks to Buy for Monthly Passive Income

Top TSX stocks with monthly dividends now trade at cheap prices for investors seeking passive income.

Read more »

Canadian Dollars
Dividend Stocks

Create Free Passive Income and Turn it Into Thousands With 1 TSX Stock

If you can't afford to invest, you can certainly create passive income another way and use that to invest in…

Read more »

Payday ringed on a calendar
Dividend Stocks

Canadian Dividend Investors: 2 ETFs That Pay Monthly Income With High Yields

Dividend ETFs often pay out monthly distributions compared to dividend stocks.

Read more »

think thought consider
Dividend Stocks

2 Stocks I Own and Will Buy More of if They Fall

Stocks tend to go up in the long run. Therefore, buying a basket of diversified stocks on dips should lead…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

2 Oversold TSX Dividend Stocks to Buy for Passive Income

Blue-chip dividend stocks such as Royal Bank of Canada and Manulife Financial pay investors a tasty forward yield.

Read more »

TFSA and coins
Dividend Stocks

TFSA Passive Income: 3 Solid Stocks to Earn $355 Every Month

Looking to earn steady passive income? Here are three solid TSX stocks that can help you earn a worry-free passive…

Read more »

Technology
Dividend Stocks

RRSP Investors: 2 Stocks to Buy in August for Dividends and Capital Gains

RRSP investors can still find top TSX dividend stocks trading at cheap prices today for a buy-and-hold portfolio.

Read more »