3 Canadian Stocks I’m Buying Before Christmas

Christmas is around the corner, but Canadian stocks are falling. Here are three top stocks I’m looking to buy on sale before Christmas.

| More on:
Smiling diverse couple holding Christmas presents while walking through a winter forest

Image source: Getty Images

Canadian stocks have taken a steep slide in the past few days. Maybe it is time to work on your Christmas shopping list for stocks. If the market continues to fall, there could be some stocks that go on sale, whether they deserve to or not.

Buy stocks like you’d buy socks — on sale!

Famed investor Warren Buffett once said, “Whether we’re talking about stocks or socks, I like buying quality merchandise when it is marked down.” While it may feel like the worst time, buying stocks after a serious pullback is often the best time to buy.

The key is to buy stocks in great quality businesses that can remain resilient through a recession and beyond. Buy and hold these stocks for the long term, and you can do very well. Here are three top Canadian stocks that are on my Christmas shopping list if they become cheap enough this year.

A top Canadian software-as-a-service stock

Descartes Systems (TSX:DSG) provides essential networks and software services to the global logistics industry. Given global geopolitical and supply chain challenges, the logistics industry continues to face complexity. That bodes very favourably for Descartes, which helps supply solutions to manage this complexity.

For the first nine months of 2022, it grew revenues, adjusted earnings before interest, tax, depreciation, and amortization (EBITDA), and earnings per share by 16%, 18%, and 8%, respectively. 89% of its revenues are service based and largely recurring. Likewise, it earns very high 20% net income margins, meaning it is very profitable.

This Canadian stock has $237 million of cash on the balance sheet. Even if its business slows in a recession, it can deploy its cash into acquisitions at high rates of return. This stock is never cheap, but if you can buy it on a pullback, it will be worth it in the long run.

A top Canadian retail stock

Aritzia (TSX:ATZ) is another high-quality Canadian stock on my Christmas wish list. Over the past three years, Aritzia has gained incredible traction with its “everyday luxury” brands of apparel. Since 2020, its sales and net income have nearly doubled!

Its new boutiques have demonstrated a very quick payback, and new locations have helped support the expansion of its online sales strategy. Aritzia is gaining traction in the U.S., and that could provide a significant leg of growth over the coming five years. It has no debt and $65 million of excess cash, so it can fund its growth strategy.

Aritzia stock is down nearly 12% in the past month. With a price-to-earnings (P/E) ratio of 30, this Canadian stock is hardly cheap. However, if it has another 10-15% pullback, it could look very attractive for long-term investors.

The “new” Brookfield manager

If you want a combination of income and growth, Brookfield Asset Management (TSX:BAM), the recent spin-out from Brookfield Corp. could be pretty attractive.

This business manages the diverse array of funds that Brookfield invests for other investors. It has no debt and requires very little capital to operate. As its assets under management (AUM) grow, so too do the fees it collects.

This Canadian stock expects to grow by around 15% a year for the next five years (based on already contracted, locked-in investment funds). In essence, this business offers an annuity-like stream of earnings. It plans to pay out 90% of its earnings as dividends to shareholder.

This Canadian stock is down 17% since it launched early last week. It is expected to yield a 4.3% dividend next year. For a nice dividend and solid growth at relatively low risk, this could be an interesting stock to hold into the new year.

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 Robin Brown has positions in Brookfield Asset Management Limited, Brookfield Corporation, Aritzia and Descartes Systems Group. The Motley Fool has positions in and recommends Aritzia. The Motley Fool recommends Descartes Systems Group. The Motley Fool has a disclosure policy.

More on Investing

Target. Stand out from the crowd

2 Canadian Stocks I’m Buying Lots of This Year

I’m looking to snatch up exciting Canadian stocks like VieMed Healthcare Inc. (TSX:VMD) throughout 2023.

Read more »

grow money, wealth build
Dividend Stocks

Got $3,000? 3 TSX Growth Stocks to Buy in January 2023

Top TSX growth stocks that look appealing for 2023.

Read more »

woman data analyze
Dividend Stocks

Need Passive Income? Turn $15,000 Into $851 Annually

This passive-income stock is already climbing higher, up 16% in the last three months! Yet it's still valuable, so you…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

Retirees: 3 Reliable Canadian Dividend Stocks to Buy Now for Passive Income

Top TSX dividend stocks now appear oversold.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.

2 TSX Stocks Safer for Investing in a Recession

These consumer companies will likely beat the broader market averages amid a recession. These stocks offer stability, income, and consistent…

Read more »

Dividend Stocks

For $100 in Passive Income Each Month, Buy 1,500 Shares of This REIT

REITs such as Northwest Healthcare can enable investors create a passive-income stream as well as benefit from capital gains.

Read more »

A colourful firework display
Dividend Stocks

2 Canadian Growth Stocks (With Dividends) to Start 2023 With a Bang

Here are two of the best dividend-paying Canadian growth stocks you can invest in at the start of 2023 and…

Read more »

sale discount best price
Dividend Stocks

4 Insanely Cheap Canadian Stocks to Buy for Passive Income

The recent bear market has created some incredible bargains, especially for those looking for passive income. Here are four cheap…

Read more »