RRSP Alert: 2 Top TSX Stocks to Buy on a Pullback

RRSP investors can find some good deals on stocks right now for a self-directed retirement fund.

| More on:
Red siren flashing

Image source: Getty Images.

The recent weakness in the TSX Index is giving RRSP investors a chance to buy top stocks at undervalued prices.


CIBC (TSX:CM)(NYSE:CM) trades near $141 per share at the time of writing compared to a 2022 high of $167.50. The stock is now below 9.8 times trailing 12-month earnings. That’s starting to look cheap for RRSP investors who can pick up a 4.5% dividend yield and simply watch the dividend increases continue to roll in over the coming years.

CIBC has done a good job of making strategic investments in the United States to diversify its revenue stream. With a healthy cushion of excess cash, CIBC has the capital to make additional purchases south of the border to boost its U.S. presence, especially in the wealth management segment.

CIBC isn’t without risks. The bank has significant exposure to the Canadian residential real estate market. If mortgage rates move too high and stay elevated for too long, there is a risk that a wave of defaults could trigger a market selloff. In this scenario, CIBC would likely take a larger hit than its peers.

That being said, a housing meltdown is not expected, and prices would have to fall considerably before the impact on CIBC would be meaningful. CIBC has adequate capital to ride out a downturn.

At the current share price, the stock appears undervalued.

Brookfield Asset Management

Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM) trades near $64.50 compared to the 2022 high around $79. The asset management giant has a market capitalization of $100 billion and US$690 billion in assets under management. The firm invests funds on behalf of clients and charges a fee for the service. Brookfield also invests its own cash alongside the customer funds in most purchases.

This is a good stock to buy for people who want to get exposure to infrastructure, renewable energy, real estate, private equity, and credit investments around the globe that would otherwise be out of reach. Brookfield Asset Management has operations in more than 30 countries.

Net income came in at US$12.4 billion 2021. Capital inflows hit US$71 billion during the year. Fee-bearing capital increased by US$53 billion to US$364 billion, resulting in a 33% jump in fee-related earnings. Brookfield Management finished the year with US$40 billion of committed but uninvested capital that will eventually earn about US$400 million in annual fees once deployed.

Brookfield Asset Management also knows when to exit investments. The company sold US$42 billion in assets during the year to book US$16 billion in gross gains, of which US$12 billion was for clients and US$4 billion was for the company.

As of December 31, 2021, Brookfield Asset Management had US$92 billion in capital available for new investments.

The stock can go through some volatile moves, but the long-term trend has been positive for investors.

The bottom line on top RRSP stocks

CIBC and Brookfield Asset Management look undervalued right now and should deliver solid total returns for RRSP investors over the long haul. If you have some cash to put to work in a self-directed RRSP, these stocks deserve to be on your radar.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends Brookfield Asset Management Inc. CL.A LV. Fool contributor Andrew Walker owns shares of Brookfield Asset Management.

More on Investing

tsx today
Energy Stocks

TSX Today: What to Watch for in Stocks on Monday, June 5

An early morning rally in oil prices could lift TSX energy stocks at the open today.

Read more »

Retirement plan
Dividend Stocks

Planning for Retirement? Here Are the Best Canadian Dividend Stocks to Buy

Buying two of the best Canadian dividend stocks now for the long term can help you retire without financial worries.

Read more »

investment research
Dividend Stocks

A Dividend Giant I’d Buy Over TD Bank Stock

Energy and financials are the TSX’s sector heavyweights, but I’d choose a dividend giant in the former over a big…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Dividend Stocks

2 Dividend Stocks Worth a Permanent Spot in My TFSA

Restaurant Brands International (TSX:QSR) and Berkshire Hathaway (NYSE:BRK.B) are two of my top TFSA holdings that I intend to hold…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Don’t Avoid Bank Stocks! This 1 Actually Has Massive Long-Term Potential

Some investors have said that it's a good time to avoid bank stocks. Here's one bank you shouldn't avoid. Buy…

Read more »

edit Businessman using calculator next to laptop

5 Stocks You Can Confidently Invest $500 in Right Now

Buy and hold stocks these TSX stocks to outperform the broader market averages in the long term.

Read more »

Increasing yield
Dividend Stocks

3 Canadian Dividend Stocks Offering High Yields and Reliable Income

These valuable dividend stocks offer solid deals right now, with ultra-high yields that will certainly last well beyond this downturn.

Read more »

dividends grow over time
Stocks for Beginners

Passive Income: How I Got to $2,000/Year After Just 4 Years of Saving

I got to $2,000/year in passive income partially by buying bank stocks like Toronto-Dominion Bank (TSX:TD).

Read more »