2 TSX Stocks I’ll Be Buying Hand Over Fist in February 2023

Top TSX stocks such as Brookfield Asset Management have the potential to deliver outsized gains to shareholders this year.

| More on:
edit Woman calculating figures next to a laptop

Image source: Getty Images.

The first month of 2023 has been quite eventful for equity investors as major indices gained pace in recent trading sessions. But the stock market is expected to remain volatile in the near term due to elevated inflation numbers, the rising cost of debt, and the possibility of a recession.

While it’s impossible to time the market, the ongoing volatility provides investors an opportunity to buy fundamentally strong stocks at a cheaper multiple. Here, I have identified two such TSX stocks investors can buy in February 2023.

Brookfield Asset Management

One of the largest alternative asset managers globally, Brookfield Asset Management (TSX:BAM) is a well-diversified TSX giant. With over US$750 billion in AUM, or assets under management, Brookfield has a presence in multiple sectors. They include clean energy, infrastructure, transportation, real estate, and private equity.

In late 2022, Brookfield Corp announced the spin-off of Brookfield Asset Management. As part of BAM’s public listing, Brookfield retained a 25% interest in the asset management business. This move is expected to unlock shareholder value as investors benefit from the income generated by the asset management business.

To expand its presence in the private markets, BAM also acquired Deutsche Bank AG’s secondaries asset management business last month for an undisclosed sum. The secondaries market simplifies the process for investors wanting to sell their stakes across private equity deals, thereby increasing liquidity in this segment.

A Bloomberg report states deal volumes in the secondaries market stood at US$53 billion in the first six months of 2022. This deal may allow Brookfield to achieve its target of US$1 trillion in assets under management by 2027.

Brookfield Asset Management forecasts annual growth in fee-related earnings between 15 and 20% in the medium term. Additionally, the company will also earn income via management fees on capital deployed on behalf of its investors. Another income source is the carried interest on the total funds raised by the company.

BAM expects fee-based earnings to touch US$4.5 billion by 2027, while net carried interest income should reach US$1.5 billion. Given these projections, BAM stock might trade between US$71 and US$94, indicating an upside potential of between 100 and 200%.

Cargojet

One of the top-performing TSX stocks in the last decade, shares of Cargojet (TSX:CJT) are down 50% from all-time highs. However, CJT has still returned 1,550% to shareholders in dividend-adjusted gains since February 2013.

Despite a challenging macro-environment, Cargojet increased sales by 36.6% year over year to $713 million in the first nine months of 2022. However, rising commodity costs and pricing pressures meant the company’s gross margins fell by 350 basis points to 26% in this period.

At a market cap of $2.1 billion, Cargojet stock is valued at less than three times forward sales, which is quite reasonable for a high-flying growth stock. As the company generates consistent profits, it also pays shareholders a dividend and currently offers a yield of 0.94%. These payouts have increased at an annual rate of 6.6% in the last 11 years.

Analysts remain bullish on CJT stock and expect it to gain over 50% in the next 12 months.

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 Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cargojet. The Motley Fool recommends Brookfield, Brookfield Asset Management, and Brookfield Corporation. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Target. Stand out from the crowd
Dividend Stocks

3 Monthly-Paying Dividend Stocks That Are Screaming Buys Right Now

These three monthly-paying dividend stocks are excellent additions to your portfolios.

Read more »

Growing plant shoots on coins
Dividend Stocks

TFSA Set and Forget: 1 Dividend-Growth Superstar for the Long Run

Manulife Financial (TSX:MFC) stock is in the zone, with dividend hikes and big buybacks likely in the cards.

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 »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

TFSA Investors: 2 Dividend Stocks I’d Buy and Hold Forever

These two stocks could provide long-term investors multi-year returns of more or less 10% per year

Read more »

crypto, chart, stocks
Dividend Stocks

Why Waste Connections Stock Keeps Going Up

Waste Connections stock (TSX:WCN) continues to hit all-time highs. But is more on the way, or is an investment wasteful?

Read more »

Money growing in soil , Business success concept.
Dividend Stocks

A Dividend Giant I’d Buy Over Suncor Stock

Suncor Energy is a blue-chip TSX dividend stock that offers you a tasty yield. But this TSX dividend giant is…

Read more »

Two seniors walk in the forest
Dividend Stocks

Passive Income Investors: The Best Bargain to Buy in June

Passive income investors shopping for stocks to own this month will be hard-pressed to find two better options that can…

Read more »

Dividend Stocks

Love Real Estate? 3 Top TSX REITs to Watch in June

For investors seeking exposure to real estate investment trusts, or REITs, here are three top Canadian options to consider buying…

Read more »