With volatility spiking, the stock market is not exactly welcoming buyers with open arms right now. But if you’re investing for the long term, there’s no need to be on the sidelines today. The recent volatility has created lots of buying opportunities for those with cash readily available to invest.
I’ve reviewed two top TSX stocks that all long-term investors should have on their watch lists this month. We may not see discounts like these for a while, so I’d act fast if you’re interested in owning either of these two market-leading companies.
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TSX stock #1: Shopify
Not long ago, Shopify (TSX: SHOP)(NYSE:SHOP) was head and shoulders above all other Canadian stocks in terms of market cap size. Today, the tech giant is valued at a market cap below $100 billion, which is half of the size of the largest stock on the TSX.
It’s been a rough ride for the tech stock as of late, which is putting it lightly. Shares are down 50% over the past year and close to 70% below 52-week highs.
On the bright side, nothing fundamentally negative has changed with Shopify over the past year. The business continues to grow at a torrid rate, despite the stock spiralling out of control.
Why are shares of Canada’s largest tech stock plummeting?
I’d argue that part of the selloff has been due to the slowdown in revenue growth. After topping 100% in year-over-year revenue growth in Q1 and 57% in Q2, the company posted 40% growth in the last two quarters of its fiscal year. Still, incredibly impressive growth numbers for a company valued at $100 billion, but it’s not surprising to see some short-term investors heading for the exits.
In the long term, the market opportunity for Shopify is a massive one — one that is still growing, too. The company continues to grow its market share, as management strategically reinvests back into the business to fuel growth.
If you can handle the volatility, this TSX stock has the potential to be a consistent market beater for many decades to come.
TSX stock #2: Air Canada
While Air Canada (TSX: AC) may be a very different business than Shopify, the two TSX stocks share a couple of common traits. Both companies have largely outperformed the Canadian market’s return in recent years, and investors can pick up shares of the two stocks at serious discounts today.
Prior to the COVID-19 market crash in early 2020, shares of Canada’s largest airline were up more than 300% since 2015. In comparison, the S&P/TSX Composite Index returned less than 20% in the same five years.
Growth like that is certainly uncommon for airline stocks in North America, but Air Canada has managed to deliver consistent market-beating returns for two past two decades.
Down nearly 60% from all-time highs, investors may not get a buying chance like this for a long time. You may need to be patient while demand for air travel returns to pre-pandemic levels, but I strongly believe it’s only a matter of time before Air Canada is back to delivering market-beating gains.
