Whenever you buy individual companies, it’s a good idea to make a decision well in advance of actually buying shares. This gives you an opportunity to sit back and really think about how the stock fits in with the rest of your portfolio and whether the company is actually a good one to hold. By doing so, you can cut down on impulsive decisions which could leave you with major losses. With that in mind, here are three stocks I intend to buy in the near future.
A massive opportunity
Over the past few years, investors have really warmed up to the renewable energy industry. More specifically, companies that operate renewable utility facilities have seen a massive increase in value. Take Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP) for example. The company operates a diverse portfolio capable of generating more than 20,000 megawatts of power.
Since the start of 2019, Brookfield Renewable stock has gained 163%. That represents an average annual return of 42.12%. In other words, a $10,000 investment made at the start of 2019 would be worth more than $26,000 today. Over the same period, the TSX has only managed an average annual return of 12.93%. Brookfield Renewable is also an excellent dividend company. It has increased its distribution in each of the past 11 years and offers a forward dividend yield of 3.27%.
A company worth holding for decades
Another company that interests me a great deal is Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM). Before you start questioning things, no, you’re not seeing double. Brookfield Asset Management is the parent company of Brookfield Renewable. Through its subsidiaries, like Brookfield Renewable and others, Brookfield Asset Management operates and invests in assets in the real estate, infrastructure, and renewable energy industries. As such, this would be a good choice for investors looking for more diversification.
Brookfield is led by its CEO, Bruce Flatt, who is often referred to as the “Warren Buffett of Canada.” Although there will only ever be one Oracle of Omaha, this nickname that Flatt has taken on is a small indication of his exceptional quality. Over the past two years, Brookfield has managed an average annual return of 23.47%. This compares to an average annual return of 10.53% by the TSX over the same period.
Adding to my largest TSX holding
Investors familiar with my articles will know that I am very bullish on Shopify (TSX:SHOP)(NYSE:SHOP). Over the long-term, there are very few companies on the TSX that I feel offer a similar risk to reward ratio. The company provides merchants of all sizes with a platform and all the tools necessary to operate online stores. Its inclusive business plans allow everyone from the first-time entrepreneur to large-cap companies to find commerce solutions that work for them.
The question with Shopify isn’t whether e-commerce will increase in penetration in the future. The question is how much it will increase in penetration in the future. In 2019, e-commerce made up about 4% of all Canadian retail sales. By April 2020, and largely accelerated by the pandemic, e-commerce accounted for about 11% of all retail sales in Canada. Although that’s nearly a 300% increase in about a year, it’s still much lower than the penetration of e-commerce in other developed countries.
