New Investors: 2 Canadian Stocks to Start an RRSP

Investors should consider buying CAE (TSX:CAE)(NYSE:CAE) and another top bargain stock for their Canadian RRSP on weakness.

| More on:

Your RRSP should be for your best long-term investment ideas. Whether you’re looking to capitalize on a long-term secular trend or buy stocks amid historic market corrections, your RRSP is a great tool that can help you build substantial wealth over the course of decades.

Indeed, it can be tempting to speculate with your RRSP funds by chasing momentum stocks that are hard to value. For others, it’s easier to merely store RRSP funds in a savings account or keep it in low-risk investments like bonds or GICs. Undoubtedly, we’re in a volatile time, with stocks that are in bear market territory, with the potential to get worse as recession looms.

Great bargain plays for new RRSP investors

Still, new investors should commit to investing in the equity markets over the long haul. At the end of the day, it’s the best asset class to own for extremely long periods of time. So, rather than looking to time your entry or exit based on economic forecasts, consider nibbling away at stocks on your radar that are at a decent price.

Currently, MTY Food Group (TSX:MTY) and CAE (TSX:CAE)(NYSE:CAE) stand out as intriguing bargain buys for RRSP investors looking to make it through another volatile year.

MTY Food Group

MTY Food Group is a little-known Canadian firm that many investors may be unfamiliar with. It’s essentially the owner and operator causal dining firms. I like to view it as the king of the Canadian food court, with over 70 intriguing brand names under the MTY umbrella.

The stock took a big hit back in 2020 before posting a full recovery that eventually ended in a bear market pullback. Shares are down around 30% from their 52-week highs over lingering recession fears and the potential impact on consumers. As you may know, less consumer spending means less money spent at the food courts.

At writing, shares of MTY Food Group trade at 13.6 times trailing earnings to go with a 1.72% dividend yield. That’s pretty cheap, assuming a modest economic slowdown is in the cards for 2023. If a recession does hit, MTY could retest the $30 level not seen since 2020.

In any case, I’m a fan of the risk/reward scenario in the promising $1.2 billion mid-cap stock.

CAE

CAE is another Canadian company that’s seen its COVID recovery come to a crashing halt, with the stock now off 28% since briefly touching its pre-pandemic high. For those unfamiliar with CAE, it’s a simulation technology company that primarily serves those in the airlines, defence, and health industries.

Undoubtedly, COVID has weighed on global air travel demand. Just as it was about to recover to pre-pandemic levels, recession fears are lingering. Eventually, the air travel industry will get back on the right track, and the many out-of-practice pilots will need to get updated with CAE’s simulation technologies.

The $9.5 billion company faces challenges in civil aviation. However, defence should help keep the turbulence steady versus the likes of an airline over the coming quarters.

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.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends MTY Food Group.

More on Investing

RRSP (Registered Retirement Savings Plan) on wooden blocks and Canadian one hundred dollar bills.
Retirement

RRSP Investing: 3 TSX Dividend Stocks With High Yields

These stocks have great track records of dividend growth and trade at reasonable prices.

Read more »

dividend stocks are a good way to earn passive income
Dividend Stocks

This 4.2% Monthly Payer Is the Income Investor’s Dream Stock

Are you looking for a growing stream of monthly dividends and strong capital returns ahead? This Canadian stock could be…

Read more »

Rocket lift off through the clouds
Tech Stocks

4 Reasons to Buy MDA Stock Like There’s No Tomorrow

The high-flying, top-performing MDA stock is among TSX’s hottest stocks to buy in 2025.

Read more »

happy woman throws cash
Dividend Stocks

I’m Going All-In Because This Stock Never Lets Me Down

Given its solid financial performance, consistent returns, and high growth prospects, this Canadian stock is ideal for long-term investors.

Read more »

dividend growth for passive income
Dividend Stocks

I’d Put My Entire TFSA Into This 7 Percent Monthly-Paying Dividend Stock

Here's why TFSA investors should consider gaining exposure to this high-yield monthly dividend stock right now.

Read more »

sources of renewable energy
Energy Stocks

This Renewable Energy Stock Is Down 35% and Ready to Soar

Northland Power has three new projects that will provide a boost to cash flows and returns for this renewable energy…

Read more »

nugget gold
Metals and Mining Stocks

1 Canadian Gold Stock That’s My Inflation Hedge

Agnico Eagle Mines stock is a gold stock that many Canadian investors have been using to earn inflation-beating returns. Is…

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

A 7.6% Dividend Stock Paying Cash Every Single Month

Whitecap's mesmerizing dividend is safe for now, but what would it take for it to cut it?

Read more »