So far, March has been a wild month for TSX stocks. Essentially, the TSX Index has given up all the gains made early in 2023, and we are back to par.
Canadian banks make a large part of the TSX Index. The TSX 60 is composed of several major financial players (think RBC, TD, Brookfield, etc.). Worries about contagion from the fallout of Silicon Valley Bank have been putting significant pressure on these financial stocks.
Energy stocks happen to make up around 10% of the TSX Index. They have seriously pulled back on worries that a recession will lead to a decline in energy demand.
Buy TSX stocks for the long term when the market is jittery
While the recent market drama might be a bit scary, it might also be an opportunity. Even recently, the acclaimed investor, Michael Burry (who predicted the massive banking collapse in 2008/2009), believes this will be short-lived.
The good news is that when the entire market draws down, it also pulls down good-quality businesses. Shrewd investors who are not afraid of the drama can pick up great businesses at better valuations.
If you got a few $1,000 to invest, this might be an attractive opportunity if you can invest with a long-term mindset (five or more years out). Here are two TSX stocks that could be interesting here today.
Brookfield Asset Management: A TSX stock for income and growth
Brookfield Asset Management (TSX:BAM) stock has pulled back 11% over the past month. This is the recent spin-out from Brookfield Corporation. This is a very intriguing income stock for a variety of reasons.
First, Brookfield is a leading manager of alternative funds and assets. These are diversified across real estate, infrastructure, renewables, credit, insurance, and private equity. Current dislocations in capital, could create great opportunities to acquire assets for cents on the dollar (especially for its credit division).
Second, the company has no debt and is asset light. It just collects a very stable and predictable earnings stream from the assets it manages. Just based on current and future funds, the company has already locked in around 15-20% annual earnings growth for the next few years.
This TSX stock yields 4% right now. It plans to pay out around 90% of earnings. As earnings grow, it is likely to keep growing its dividend. For income lovers, this could be an attractive buying opportunity.
Canadian Natural Resources: A top energy stock for the long term
Oil prices recently pulled back on global economic worries. Oil is trading for its lowest price since late 2021. While that has been a bad omen for TSX energy stocks, it may be a buying opportunity for investors that can stomach a little more volatility and risk.
Canadian Natural Resources (TSX:CNQ) stock has declined by 11% since March. With over a million barrels of oil and gas produced per day, it is one of Canada’s largest energy producers. CNQ also happens to be one of Canada’s most efficient and best managed energy companies.
It has over 30 years of energy reserves. It can produce that energy at a very low cost (it is cash flow positive between US$30-40 per barrel). This provides its significant operational and financial flexibility.
Today, this TSX stock yields 4.9%. It has been a great dividend-growth stock. Given its very strong balance sheet, this should persist.
While energy demand could temporarily decline, there is a long-term deficit in production that should keep prices elevated for the near future. If you can be patient and buy in the face of selling, this high-quality income stock could pay off.