2022 is an excellent year for beginners to start investing. Nearly every industry — from software to retail — is beaten down. Investors are concerned about rising interest rates, rampant inflation, and a potential recession.
This isn’t a good environment for speculators. But it’s ideal for beginners looking to make long-term bets. High-quality companies are trading at a discount and could deliver substantial rewards when the economy eventually recovers.
Here’s a closer look at a high-quality blue chip that’s perfect for beginners to get started with.
TMX Group
TMX Group (TSX:X) is a top pick for beginners. The company owns and operates the flagship stock exchanges in Canada. This is a resilient business model that is tethered to the national economy.
It’s been a roller-coaster year for TMX amid heightened volatility in the broader stock market. While the stock is up 2% year to date, it has also shed more than 9% in market value from highs of $139 a share recorded in May.
While the company operates markets exchanges and clearing houses in Canada, it has come under immense pressure amid growing uncertainty in the stock markets. Fears have gripped the market owing to increasing concerns about runaway inflation and a slowdown in global economic growth.
The S&P/ TSX Composite Index is already down by more than 13% year to date, affirming the strong selloff in the equity markets. The depressed sentiments in the stock markets might explain TMX Group adding five new issuers to the TSX in June — less than half the 11 that the company added in May and 25 last year in June. Total financing raised in June was down 67% year over year.
Amid the poor showing in the market this year, TMX has consistently outperformed in the market. Shareholders in the company have enjoyed more than 80% in share price rise over the past half-decade. Earnings per share have also grown by about 23% a year, which is higher than the 14% average annual increase in share price.
TMX stock currently trades at just 14 times earnings per share. That implies an earnings yield of 7%, which is far better than most growth or dividend stocks on the market.
Currently, TMX is paying a solid dividend yield of 2.61%, ideal for anyone looking to generate some passive income. In addition, the stock appears to be trading at a discount after the 9% pullback from 2022 highs.
Bottom line
Beginners need a robust blue-chip stock to get started. TMX Group — the owner of Canada’s biggest stock exchanges — is an ideal target. The stock has outperformed the underlying index this year and will likely perform even better if the market bounces back. For new investors looking to make a relatively safe long-term bet, this stock is *a chef’s kiss*.
Good luck!
