My Take: The Only 3 TSX Stocks You Need in 2023

If you’re looking for a recovery after a recession, these are the only three TSX stocks I’d consider for 2023.

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If you’re nervous about investing these days, I don’t blame you. The TSX today continues to trade down about 3.5% in the last year. That’s down even further when considering 52-week highs. And given we’re not even in a recession yet, it could get worse before it gets better. That is why there are only a few TSX stocks I’d consider right now.

Think the Big Six

If you’re going to invest in anything right now, some of the best options are with the Big Six banks. Canadian banks have performed as some of the best in the world during recessions. That even includes during the Great Recession just over a decade ago.

That’s because these TSX stocks take out provisions for loan losses — losses that we’re going through right now. This allows the banks to put that cash towards loan losses and move forward as soon as the economy recovers.

Now, that being said, these are still, of course, financial institutions. And these institutions may not all do well during the next year. However, that’s where the next part comes in.

Think long term

This should be your strategy with TSX stocks in general but especially with the TSX today. With the market down, there are opportunities where investors can receive a strong recovery as soon as the market rebounds. And with the Big Six banks, that should be quite quickly.

Although banks are down now, look to their histories to see that they rebound to pre-drop prices usually within a year’s time. This has happened decade after decade and recession after recession.

Yet I mention just three in my article title. So, what are those three? Let’s get into that next.

The three banks I’d buy

If I’m buying just three of the Big Six banks on the TSX today, the TSX stocks I’d choose are Toronto-Dominion Bank (TSX:TD), Canadian Imperial Bank of Commerce (TSX:CM), and Bank of Montreal (TSX:BMO).

All three of these banks offer a few things in common. Each is down in the last year, trading within value territory in terms of their price-to-earnings ratio. Further, they also have some of the higher dividends to consider as well.

However, what I also like about all of them is their growth trajectory. TD stock has been growing through a diverse range of products as well as entering partnerships with credit card companies and more. BMO stock has been growing into the United States, and CIBC stock has become the customer service bank of choice!

Bottom line

If you’re looking for just three TSX stocks to buy right now, I would seriously consider TD stock, BMO stock, and CIBC stock. You can get a deal on each of these banks right now, knowing full well that each will recover to pre-drop prices after a recession. If you hold for decades, you could see your returns skyrocket out of this recession and beyond, all while collecting stellar dividends in the process. So, for me, these are the only three you need for 2023.

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 Amy Legate-Wolfe has positions in Canadian Imperial Bank Of Commerce and Toronto-Dominion Bank. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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