Got $5,000? 3 Stocks to Hold for the Next 20 Years

This could be an opportune time to pick up TSX stocks that have seen steep corrections recently.

STACKED COINS DEPICTING MONEY GROWTH

Image source: Getty Images

Inflation slowing down of late is a positive sign for growth stocks. While we are still not out of the woods completely, names could see upward momentum continuing in the short to medium term. It will be important to see how inflation and rate hikes play out in the next few months. However, this could be an opportune time to pick TSX stocks that have seen steep corrections recently.

Here are top TSX stocks that offer handsome growth potential for the long term.

Nuvei

Canadian payment processor Nuvei (TSX:NVEI)(NASDAQ:NVEI) stock has shown significant weakness since late last year, which is in line with its peers. It has dropped 45% this year, notably underperforming TSX stocks at large.

However, NVEI stock could be ripe for a reversal given the recent correction and change of course in macro indicators. Plus, Nuvei will likely continue to see decent financial growth as guided by the management. In the second quarter (Q2) 2022, the fintech company reported 19% growth year over year, led by a 38% increase in volumes.

Nuvei has a diversified revenue base and expects to increase it by over 30% annually in the long term. Apart from the handsome revenue growth, the management is confident of generating an adjusted EBITDA margin of over 50% in the long term. Nuvei has a healthy margin profile and consistently generates a gross margin of around 80%.

Along with its quarterly earnings, interest rate increases will have a significant impact on NVEI stock. So, if the policy tightening slows, and Nuvei sees superior earnings growth, NVEI stock should see a meaningful recovery.

Fortis

Even if you are a growth investor, consider allocating a portion to defensive investments. Top Canadian utility Fortis (TSX:FTS)(NYSE:FTS) is one of the top defensive stocks on the TSX. It earns stable cash flows and pays regular dividends. FTS stock yields a decent 3.5%, which is in line with its peers.

Interest rates and utility stocks generally trade inversely. So, as the rate-hike cycle changes course, utility stocks like Fortis could move higher. In addition, Fortis stock has a low correlation with broad market indices, which plays well in bearish markets.

Also, Fortis has a long dividend payment history and offers reliable dividends. Even in case of an economic downturn, utilities like Fortis earn stable cash flows, which facilitate consistently growing dividends.

Fortis might not be an apt pick for all kinds of investors, as it moves slowly and underperforms markets in the short term. However, if you have a long-term horizon and a relatively low-risk appetite, FTS should be on top of your watchlist.

Suncor Energy

Canada’s oil sands giant Suncor Energy (TSX:SU)(NYSE:SU) stock looks attractive after its recent correction. Its superior dividend- and earnings-growth potential will drive the stock higher in the short to medium term.

Suncor Energy expects a notable improvement in its net debt, as its windfall free cash flows facilitate faster deleveraging. Once it achieves the net debt target, the management could allocate a significantly higher portion of its cash flows towards dividend payments.

Suncor Energy stock currently yields a decent 4.4%, which is higher than TSX stocks but lower than its peers. The stock has gained 88% in the last 12 months, underperforming peers. Still, given the strong price environment, improving balance sheet, and undervalued stock, Suncor Energy could create considerable value for its shareholders.

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 has positions in and recommends Nuvei Corporation. The Motley Fool recommends FORTIS INC. Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned.

More on Stocks for Beginners

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies
Tech Stocks

3 Millionaire-Maker Tech Stocks That Should Be on Your Radar

These three tech stocks have already proven themselves worthy, but have a lot more to prove in the near future.…

Read more »

A close up image of Canadian $20 Dollar bills
Tech Stocks

3 No-Brainer Stocks to Buy With $20 Right Now

These three stocks are easy buys for those who don't have all that much to spend, and want long-term growth…

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Stocks for Beginners

The Top 3 Long-Term TSX Growth Stocks to Buy Today

These three growth stocks might be some of the best-performing stocks of the last year, but according to analysts so…

Read more »

financial freedom sign
Dividend Stocks

5 Steps to Financial Freedom for Canadian Millennials

Follow these steps and nothing can stop Canadian millennials from achieving their early retirement dreams.

Read more »

A person builds a rock tower on a beach.
Stocks for Beginners

How to Start Investing With Just $1,000

Even just $1,000 can turn into retirement income with the right investment strategy. So, here's how to get started.

Read more »

concept of real estate evaluation
Dividend Stocks

BRE Stock: Should You Buy the 10.5% Yield?

BRE stock (TSX:BRE) offers investors the opportunity for a rebound in a real estate sector that should see high prices…

Read more »

A bull outlined against a field
Stocks for Beginners

Top 5 Sectors to Watch in a Bullish Market

Do you want growth in a bull market? These aren't just the sectors to watch but the stocks that should…

Read more »

little girl in pilot costume playing and dreaming of flying over the sky
Dividend Stocks

For a Shot at $6,228/Year in Passive Income, Buy 755 Shares of This TSX Stock

Looking for passive income? You'll need to look beyond only dividends. Which is why EIF stock could be one of…

Read more »