If you are a long-term investor with some spare capital to invest today, the TSX stock market correction may be a gift. It is difficult to say when the bear market will reverse. High inflation and fast-rising interest rates could certainly challenge the economy and slow down company earnings.
Yet this will not last forever. Bear markets are a natural part of the market cycle. The stock market overheated last year, and the current correction is sifting out speculation. For long-term investors, this is great news. Stocks in great businesses have gone on sale, and there are plenty of bargains.
Be greedy when others are fearful
As Warren Buffett famously said, “Be fearful when others are greedy, and be greedy when others are fearful.” If you have a five-, 10-, or 20-year investment horizon and plan to be an investor in real businesses (not a speculator or gambler), now is the perfect time to be greedy and buy. If you are looking for some interesting growth stocks that trade under the radar in Canada, here are three to consider today.
An up-and-coming TSX tech stock
If you have heard of the investment success of Constellation Software (an over 2,000% return in the past 10 years), you may want to consider its little brother, Topicus.com (TSXV: TOI). Topicus.com was spun-out of Constellation early last year. It is focused on acquiring and developing vertical market software businesses in Europe.
In essence, it is taking Constellation’s playbook and replicating it through continental Europe. The interesting part is that it also has a focus on developing and marketing its own software. This has been creating an attractive organic growth profile — potentially even better than Constellation’s.
This Canadian-listed stock is down 35% in 2022. It trades just above its initial spin-out price last year. For an initial entry point, now looks to be an interesting opportunity.
A TSX small-cap stock
H2O Innovation (TSX: HEO) is an interesting infrastructure and renewable stock. It provides specialized water filtration services to municipalities, utilities, and corporations. With fresh water in short supply, H2O has a large global growth opportunity.
It has recently made several acquisitions that expand its sales channels and geographic reach. Despite supply chain challenges, it has still been able to grow at an attractive double-digit rate. Most of its revenues are recurring or contracted, so it generally has a stable business model.
Its stock is down 21% this year. For a solid small-cap company with a steady growth track ahead, this TSX stock is an interesting opportunity now.
A long-term compounder
Colliers International Group (TSX: CIGI)(NASDAQ: CIGI) is another stock to buy in 2022 and hold for years. While it has been known as a commercial real estate broker, it has recently expanded into platforms in consulting/design/project management and asset management.
Like H2O, over 50% of its earnings are from recurring services. This provides economic resilience in the business. The company has been growing both organically and through acquisition. That has fueled 20 years of around 20% compound annual returns.
Colliers stock is down 21% this year. Its valuation looks downright cheap. For a quality business with a strong balance sheet and a top management team, this is a great underfollowed TSX stock to buy for the long run.
