Market corrections are unpleasant, but they’re needed for the long-term prosperity of a bull market. Indeed, 2021 didn’t get much in the way of pullbacks. And odds were that 2022 would include a painful drawdown, likely in excess of 2022. With the S&P 500 down over 13%, with the Nasdaq 100 in bear market territory (that’s a 20% pullback), the TSX Index has held steady, just down around 3% from its high, thanks in part to strength in the energy and financials.
The run-up in oil is unprecedented, and it may not last for long, especially if there’s some sort of cease-fire reached between Ukraine and Russia. Indeed, geopolitical turmoil hasn’t been this high in quite a while. With markets struggling to put in any sort of bottom, I think new investors need not panic. Everybody else has already had the opportunity to panic sell. While a worsening of geopolitical turmoil could cause a bear market in the S&P 500 or even the TSX Index, I’d argue that from a longer-term perspective, new investors should continue on. If anything, it’s better to buy stocks that are down 15-30% than stocks at or around their highs.
While there’s a lot of near-term uncertainty and a waning macro environment, I still think that there are starter stocks out there that can help you build wealth over the long haul. So, if you’re in it for the next 10 years, not just the next 10 months, consider the following firm.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX: ATD) is a bit of a weird one. It’s a rare consumer staple, and it hasn’t been as eventful these days. The convenience store kingpin has seen two major deal proposals implode. With the firm looking to suspend its Russian operations, the stock could take a near-term hit to the chin on the sales front. Once the crisis resolves (hopefully sooner rather than later), one has to think that such a suspension is a near-term headwind, as opposed to a more persistent one.
In any case, ATD stock is down around 6% this week to around $46 and change per share. I think the damage is overblown. The stock goes from 15 times trailing earnings and has a clear pathway to double-digit earnings growth. New investors should look to the name if they seek the perfect mix of predictable bottom-line growth and deep value. I think it’s just a matter of time before the next synergy-rich deal is announced. The firm is gushing with cash, and sooner or later, it’ll pounce on a deal that’s likely to send shares soaring.
Of course, new investors are hoping for a convenience store deal, not a grocery giant. In any case, ATD stock looks very solid from a long-term perspective. I think the stock could make a move to $68 per share by year-end if the market can regain its footing. Even if it can’t, I think shares are absurdly undervalued for those looking to invest over a five-year horizon.
The Foolish bottom line for new investors
Investing is not easy. It’s painful. But when it’s most painful to buy, the risk/reward scenario is likely tilted in your favour. Don’t time the market. Stay in it and insist on bargains when markets slide, and everyone is inclined to hit the panic button!
