Canada’s main stock index started and ended last week above 22,000. The TSX posted a new all-time of 22,074.40 on the 22nd before settling lower at 22,005.94 on Friday. On a year-to-date basis, the index’s gain is 3.69%, powered by the energy (+40.30%) and materials (+21%) sectors.
Allan Small, senior investment adviser at IA Private Wealth, expects the TSX to do well when oil, gold, or commodities are doing well. That has been the case this month, notwithstanding the geopolitical tensions. However, not all TSX giants are faring well.
You can buy Shopify (TSX:SHOP)(NYSE:SHOP) and Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM) at a discount today. The tech superstar lost significant value, while the global asset manager seems undervalued.
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Deep discount
Shopify has been a perennial TSX30 winner since the TMX Group launched flagship program for high-growth stocks in 2019. The e-commerce platform ranked first in 2020 and placed second and third in 2019 and 2021. Technology was the top-performing sector two years ago, but it’s losing by 21.23% year to date.
The tech phenomenon became TSX’s largest publicly listed company in 2020, unseating Royal Bank of Canada. As of this writing, the market cap is down to $106.63 billion. RBC is back on top, and many more companies have overtaken Shopify in terms of market cap.
Performance-wise, the premier tech stock rewarded investors with a 217.07% (46.71% CAGR) in the last 3.01 years. Shopify’s 52-week high is $2,228.73. Today, it trades at $846.65 per share, or 62% lower. Current investors are down 51.39% year to date.
Shopify’s tailspin began on February 16, 2022, when the company announced lower revenue projections, not a monster growth like before. Its CFO, Amy Shapero, said the COVID-triggered acceleration of e-commerce would be absent this year. Management believes Shopify has less advantage when consumers shift back to brick-and-mortar stores.
Nevertheless, market analysts covering Shopify maintain a buy rating. Their 12-month average price target is $1,965.84, return potential of 132%.
Global infrastructure play
Brookfield Asset Management isn’t beaten down like Shopify but is undervalued, even vis-à-vis the nature of the business. The $111.12 billion asset manager titan has the infrastructure, renewable power, real estate, and private equity assets, including venture capital. In the last 3.01 years, the stock’s total return is a respectable 79.86% (21.53% CAGR).
At $70.86 per share, the trailing one-year price return is 27.39%, although the stock is down 6.99% year to date. Still, BAM pays a 0.95% dividend to compensate for the loss. Market analysts are bullish and forecast the price to climb between 29% (average) and 40% (high) in 12 months.
BAM is best for investors looking for a global infrastructure play. Its subsidiaries include Brookfield Business Partners, Brookfield Infrastructure Partners, Brookfield Property Partners, and Brookfield Renewable Partners. Shares of these companies also trade on the TSX if you prefer specific sectors or industries.
Points to consider
Brookfield Asset Manager can be your safety net if you’re a risk-averse investor. Meanwhile, Shopify and the tech sector remain in a slump. However, the price is a steal if you have the patience to wait for its eventual rebound.
