The TSX has fallen over 4.8% in the last couple of weeks, and the slump might continue until investors are sure that the collapse of banking institutions in the U.S. won’t have a ripple effect in Canada. The situation of the TSX is exacerbated by the weak energy sector, which has experienced a harsher fall over the same period.
The year 2023 is expected to be the year of recession, and most investors had ample time to get comfortable with that idea. However, the collapse of two U.S. banks within days of each other triggered many people to draw parallels to the Great Recession.
It’s difficult to predict whether the current market will meet the same fate, but it may be a good time to snatch up some great picks at discounted prices right before the dust settles and the market starts a long-term, bullish run again.
A tech stock
Constellation Software (TSX:CSU) combines the powerful growth pace common among tech stocks with a trait that’s not as common: consistency. The company has been growing its investors’ capital for well over two decades at an exemplary pace and, in the last decade alone, experienced a growth of about 1,800%. The total returns (including dividends) are well over 2,000%.
The stock is also incredibly resilient. It recovered from the 2020 crash in a matter of months and is resisting the current market-wide downward momentum, though some of the credit goes to the tech sector as a whole.
One of the primary strengths of Constellation Software is its business model. The six companies in its portfolio offer vertical market solutions to various industries.
A well-established clientele spread out over the globe and healthy financials support and sustain the stock’s upward momentum. The stock is bullish right now, but the current weak market may hang a modest discount sign on the stock, making it an even more compelling investment.
An energy stock
March hasn’t been a good month for the energy sector as a whole, but many constituents have been going down for a while. Tourmaline Oil (TSX:TOU) is among the energy stocks that started slumping at the end of last year. Tourmaline itself is currently offering a roughly 32% discount.
The stock is both undervalued and discounted right now. This may play into its recovery in a healthy market, and if the stock falls further due to the current market-wide slump, you may also get to lock in a healthier yield than the one it’s offering right now. However, it would be prudent to consider the sector’s recovery or non-recovery before adding this stock to your portfolio.
The market is currently on fire, but not in a good way, and, at this point, we can’t say whether it will recover soon or if the slump will turn into a year-long crash. However, the two stocks are strong long-term holdings, and if you can buy them discounted, you may boost the overall returns you will get from these stocks over the course of their stay in your portfolio.