As we head into 2023 and face an economic environment that we haven’t seen in years, with a recession almost certain to materialize, Canadians are undoubtedly asking themselves what the best stocks to own are.
On the one hand, many stocks are trading undervalued and haven’t been this cheap in some time. On the other hand, with so much uncertainty about how the economy will perform in 2023, it makes sense to own high-quality and defensive stocks. call me on
In market environments like we’re seeing today, many of the undervalued stocks come with more risk. At the same time, safer investments may not offer much of a discount at all.
So it’s crucial to ensure that you own both. You, of course, want to take advantage of the deals in the market, especially if you can find a high-quality stock trading cheaply. However, first and foremost, you’ll want your core portfolio stocks to be highly reliable and defensive investments that can protect your capital through uncertain times.
One stock that looks like it could offer the best of both worlds is Enbridge (TSX:ENB), the massive Canadian energy giant.
Not only is Enbridge one of the most important companies in the North American economy, which helps make it reliable, but the stock also looks like it could be offering investors a major bargain today.
Enbridge’s status as an energy giant helps make it highly reliable
As of Monday’s close, Enbridge had a market cap and enterprise value (EV) just shy of $105 billion and $200 billion, respectively. That goes to show just how large Enbridge’s company is, but its operations are what makes the company so reliable.
Enbridge is, first off, well diversified, with assets all over North America and several business segments that offer synergies and help reduce risk.
These assets are responsible for transporting roughly 30% of all the oil produced in North America, as well as nearly 20% of all the natural gas consumed in the United States.
It also operates the third-largest natural gas utility in North America by consumer count, as well as a rapidly growing green energy segment as it continues to transition and invest in the future.
Because these assets are so essential to the North American economy, the massive energy giant helps offer stability to your portfolio. Furthermore, because its pipeline and much of the infrastructure it owns are long-life assets, the company is a major cash cow and constantly earning billions in free cash flow each year.
This consistent cash flow it earns, coupled with its highly reliable operations, has allowed Enbridge to increase its dividend every year for over a quarter century now.
Enbridge offers investors an attractive bargain today
Although you may not expect Enbridge to be extremely undervalued considering how big and reliable it is, for a high-quality stock, the value it offers makes the stock worth considering for many Canadians.
Furthermore, the fact that it’s not cheaper is also a good sign and shows that Enbridge is one of the top Canadian stocks to buy that can protect your capital through these economic conditions.
Still, with the stock trading at a forward price-to-earnings ratio of just 17 times, that’s not only an attractive valuation. It’s also below its 10-year average of 21.2 times.
In addition, it has a forward EV to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio of 12.2 times, which is also below its 10-year average of 13.6 times.
So with this high-quality and reliable energy giant offering a significant bargain considering its reliability, and the fact that it offers a current dividend yield of 6.8%, Enbridge is one of the top stocks to consider adding to your portfolio ahead of 2023.