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3 Stocks to Win the Next Bull Market

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The pandemic-driven market crash of 2020 brought an end to one of the most consistent bull runs (for the broad market, not every sector) in recent history.

And even though not all experts might dub it such but we are already in the next bull market. Some sectors have already gone through the recovery-fueled bull market at different times, that is, tech right after the crash, energy only recently, etc., and are now normalizing.

But soon, the economic recovery as a whole and revitalized investor confidence are likely to fuel a bull market that might last another decade. And if you believe that’s how it will play out, there are a few stocks that should be on your radar.

A financial service company

What better company to invest in the bull market than the company whose services allow many Canadian investors to take advantage of the bull market, that is, TMX Group (TSX:X), the company that owns and operates the TSX (among others). TMX has been a reliable long-term growth stock for the last two decades and offers a remarkable five-year compound annual growth rate (CAGR) of 22.2% at a slightly overvalued price.

Even though it’s currently trading at a premium, the stock is likely due for a correction along with the rest of the sector and might become more attractively priced in the near future. The company also offers dividends, and the yield is currently at 2.2%.

The company’s financials still haven’t reached the pre-pandemic levels yet, and if the financial recovery coincides with the end of the correction, the stock might enter a new bull-run phase.

A long-standing Dividend Aristocrat

Thomson Reuters (TSX:TRI)(NYSE:TRI) started out as a media company and has now evolved to consultancy. It provides answers and solutions to a wide array of industries. But the bulk of the revenue is concentrated around three business segments, that is, legal professionals, corporates, tax & accounting professionals. The global print segment of the company is slowly sliding down to obscurity.

The company has been growing its payouts for 27 consecutive years, making it an aristocrat across the border as well. But a stellar dividend history, while promising the reliability of payouts, doesn’t impact the magnitude. And since its current yield is 1.5%, that might not be reason enough to invest in this company. Its 10-year CAGR of 18.2%, however, is a reason worth considering.

A powerful growth stock

Lightspeed (TSX:LSPD)(NYSE:LSPD), while not as iconic as the Canadian e-commerce giant Shopify it’s always compared with, it’s a powerful holding on its own. The stock has risen over 470% since inception and over 220% in the last 12 months. It is quite expensive, but not as aggressively expensive as a tech stock with a similar growth might have been.

Lightspeed has penetrated its niche market in around 100 different countries. It caters to a wide variety of POS and other e-commerce needs of SMBs. It’s financially quite sound, with almost no debt and about $1 billion in cash and investments, but the stock is volatile. It has a beta of 3.02. Still, its growth potential cannot be denied and it might deserve a place in your portfolio.

Foolish takeaway

Not every overpriced growth stock is a risky buy. Some expensive stocks are expensive because of their growth potential, and if you keep waiting for a bear market, you might lose the opportunities a healthy bull market presents.

Good companies and good businesses, especially ones that are poised for further growth, should be considered at relatively different thresholds compared to a typical value stock.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Lightspeed POS Inc and Shopify. The Motley Fool recommends TMX GROUP INC. / GROUPE TMX INC. and recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify.

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