Up nearly 20% on the year, TSX stocks are riding an incredible bull run. Valuations in the market may be rising, but I’m still investing my money into the TSX. Even amid the high prices, I believe there is still plenty of value in the Canadian stock market today.
I’m as bullish as the next Canadian investor on Shopify and Lightspeed, but those stocks’ high valuations have me searching elsewhere on the TSX for my next buy.
Here are two top TSX stocks to add to your watch list this month.
Market recovery TSX stocks
It’s been fascinating to watch the market’s strength throughout this pandemic. The S&P/TSX Composite Index experienced a market crash in early 2020, like many other indexes across the globe. But since April 2020, the Canadian market is up a whopping 75%.
We’re still not yet past the COVID-19 pandemic. The end is in sight, but there’s no shortage of uncertainty in what the next six to 12 months may look like.
I’m a Foolish investor with a time horizon much longer than six to 12 months. That being said, I have a couple of TSX stocks in mind that I think are in a prime position to deliver market-beating growth as we move past the COVID-19 pandemic.
It’s hard to imagine goeasy (TSX:GSY) surging even higher after posting a gain of 800% over the past five years. There haven’t been many hotter stocks on the TSX than goeasy as of late. Even so, I don’t think the growth will be slowing down anytime soon for this TSX stock.
The $3 billion company is a consumer-facing lender to Canadians across the country. Home and auto are two areas that goeasy specializes in. It also leases home items such as furniture and appliances to its customers.
I’m betting that consumer spending is going to shoot up, as the country continues to slowly reopen. If that is the case, goeasy stock could very well continue to deliver multi-bagger growth to its shareholders.
Even with all of the stock’s recent success and growth potential, goeasy is very reasonably priced today. Shares are trading at a favourable price-to-earnings ratio below 20.
Domestic travel in Canada has begun to pick up but the number of Canadians travelling internationally is still understandably below pre-COVID-19 levels. I believe it’s only a matter of time before Canadians return to travelling internationally. And if you add in an increase in consumer spending, picking up shares of a discounted airline stock this month could be a wise decision.
Air Canada (TSX:AC) has rebounded well from its March 2020 lows but has been trading flat for most of the year. I would expect it to continue to be an underperforming stock until the country really moves past this pandemic.
Even with the COVID-19 market crash, shares of Canada’s largest airline are up a market-crushing 160% over the past five years. The stock lost more than half of its value in early 2020 but has more than doubled since its lows of last year.
Air Canada was a market-beating TSX stock before this pandemic, and I don’t think it is far from returning to delivering those types of gains.
Still down 50% from all-time highs, Air Canada is at the top of my watch list right now.
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 Nicholas Dobroruka owns shares of Lightspeed POS Inc and Shopify. The Motley Fool owns shares of and recommends Lightspeed POS Inc. and Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify.