Canadian savers are searching for top TSX stocks to add to their self-directed RRSP portfolios. The recent market pullback has finally given investors a chance to buy some top stocks at undervalued prices.
Shopify
Shopify (TSX: SHOP)(NYSE:SHOP) got caught up in the recent tech rout. The share price fell from above $2,100 in November to a recent low near $1,000. A rebound in the past few days has the stock back up to $1,150 at the time of writing.
More volatility could be on the way in the near term, but RRSP investors who buy Shopify stock at this level should see decent returns in the coming years. The company has the scale to defend its position in the market and the nature of its services make it unlikely a customer will switch once they set up their online business using Shopify’s platform.
Management continues to forge strategic partnerships with leading companies in global markets. Agreements with TikTok and Chinese e-commerce giant JD.com are good examples. This will enable Shopify to expand the opportunities of its users to market their products to more international clients.
Brookfield Asset Management
Brookfield Asset Management (TSX:BAM.A)(NYSE: BAM) is an alternative asset management firm that has more than US$650 billion in assets under management spread out across globe in a number of sectors, including real estate, infrastructure, and renewable energy.
Brookfield Asset Management invests its own funds as well as money on behalf of clients such as pension funds, sovereign wealth funds, and rich families. Fee-bearing capital represented more than US$340 billion of the total assets under management at the end of Q3, 2021. The company continues to raise significant new capital from clients. As soon as the funds are invested, Brookfield Asset Management starts collecting the fees.
The company targets long-term annual returns of 12-15% on the investments. Management has a goal of doubling the size of the business over the next five years.
The stock trades near $71 per share at the time of writing compared to the 12-month high around $78.
Barrick Gold
Barrick Gold (TSX: ABX)(NYSE: GOLD) trades near $24 per share compared to nearly $40 when gold surged to US$2,080 per ounce in 2020. At the time of writing, gold trades near US$1,800 per ounce. That’s only about 13.5% off the high, yet Barrick Gold stock is down roughly 40%.
The company generated significant free cash flow in Q3 2021, and the Q4 results should also be solid. Barrick Gold has a very strong balance sheet and makes good margins at the current gold price. Gold could catch a nice tailwind in 2022, as global investors seek safe havens amid the threat of war between Russia and Ukraine and concerns that high inflation will persist and erode buying power.
The crypto meltdown might also trigger a new flood of funds back into gold, as investors decide that Bitcoin and the other cryptocurrencies are too volatile.
Barrick Gold has tripled its dividend since September 2018 and another increase could be on the way this year. Barrick Gold might also decide to give investors a special return of capital like it did in 2021. Shareholders received a bonus of US$0.42 per share last year.
Some gold exposure is often recommended for a diversified portfolio. Barrick Gold appears undervalued right now if you are of the opinion that the price of gold will hold its current level or move higher in the next few years.
The bottom line on top RRSP stocks to buy now
Shopify, Brookfield Asset Management, and Barrick Gold all appear cheap right now for a buy-and-hold RRSP portfolio. If you have some cash to put to work, these stocks deserve to be on your radar.
