The TSX today is far more volatile than it was at the beginning of September. Motley Fool investors saw the composite reach all-time highs, yet by mid-September, TSX stocks started to shrink. After climbing 70% between March 2020 and Sept. 1, 2021, TSX stocks are now down 31% as of writing.
But does that mean it’s a bad time to invest? Absolutely not. There are plenty of TSX stocks out there that investor can latch onto. While a lot of this recent movement has to do with inflation and real estate crises, it’s also all linked to the COVID-19 pandemic.
So, when the pandemic is over, Motley Fool investors are going to need TSX stocks that are going to get them back out from the depths. Let’s first look at what kind of stocks might get you there.
Finding the right growth stocks
Emphasis on finding the right growth stocks. There have been plenty of growth stocks on the TSX today, but not all of them are set to continue doing well after the pandemic is over. What investors need to research is what analysts deem to be the top TSX stocks to continue doing well long after the pandemic is over.
In this case, it’s best to look at the industries that will be necessary after the pandemic and that have shrunk during it. This will likely lead to valuable price-to-earnings (P/E) ratios and enterprise value over EBITDA (EV/EBITDA) under or around 15.
Now, you might think that these TSX stocks would be solid short-term holds, and I can’t say you’re wrong. But let me be clear. Here at the Motley Fool, we like long-term holds. And there’s a good reason. Rather than worry about short-term volatility, if you find the right growth stocks, you can look forward to decades of growth. With that in mind, here are two that fall perfectly into this category.
A top TSX stock to consider
Let’s start with an obvious choice and discuss Enbridge (TSX:ENB)(NYSE:ENB). Enbridge stock is a top TSX stock for those seeking long-term growth, income, and stability, and all for a cheap price. Shares of Enbridge stock are up 31% in the last year, yet analysts believe in the next year, there is a further 9% of growth on the way.
Sales and earnings are set to be in the double digits year over year for the next three years at least, and that comes down to the company’s new projects. Enbridge stock had several growth projects in the works that were delayed because of COVID. Now, production is running at all cylinders.
In fact, there were two pieces of good news for Enbridge stock recently. After eight years, Line 3 is now complete and up and running as of Oct. 1. The company is not just thinking about today either. This TSX stock also made a partnership with Vanguard Renewables to turn waste into carbon-neutral energy. So, this will continue to create cash flow, even after its long-term contracts run out.
Yet Enbridge stock trades at a valuable 16.9 P/E ratio, and EV/EBITDA of 13.1. You can pick up a reliable dividend yield of 6.57% and look forward to continued growth post-COVID.
But another industry that will always be around, especially with renewable energy updates coming, is construction. There is an enormous backlog in construction projects, one that Aecon Group (TSX:ARE) is ready to fill. In fact, it has over $6 billion in backlog on the books, even as it continues winning new projects.
Yet even with 37% growth behind it, this is one of the TSX stocks that still has double-digit growth ahead. Aecon stock is predicted to rise an average of 23% in the next year. All while trading at an incredibly valuable P/E of 12.61 and EV/EBITDA of 10.76. And you even get a 3.63% dividend yield!
If you’re only buying one of these TSX stocks today, it comes down to value and goals. If you’re looking to sell shortly, as in a few years, I would go with Aecon stock for short-term growth. But if you’re thinking long term, Enbridge stock has the backing to see you through decades of solid growth. And it dishes out a solid dividend to boot!