There are plenty of investment opportunities for those with a long-term horizon. Yes, the ongoing market volatility can be quite scary, but it allows you to gain exposure to several undervalued gems that are poised to outpace broader indices in the next bull run.
So, let’s see where you can invest $50,000 right now.
Bank stocks such as Toronto-Dominion Bank
One of the largest banks in the Americas, Toronto-Dominion Bank (TSX: TD) is trading 27% below all-time highs. The banking crisis in the United States is impacting Canadian companies, too. But TD Bank and its peers in Canada are equipped with robust balance sheets, allowing them to get through another economic downturn without breaking a sweat.
TD Bank stock offers investors a tasty dividend yield of 4.9%. Moreover, shares are priced at nine times forward earnings, which is very cheap. Despite its massive size, analysts expect TD Bank to increase sales from $46 billion in fiscal 2022 to $58.2 billion in fiscal 2024 (ending in October).
Cannabis stocks such as Green Thumb Industries
Among the largest cannabis stocks in the world, Green Thumb Industries (CNSX: GTII) is valued at a market cap of $2.54 billion. A multi-state operator in the United States, Green Thumb has established a retail footprint so vast that it can serve more than 50% of the population in the U.S.
It ended the fourth quarter with US$259 million in sales — an increase of more than 6% year over year. Its top line can easily explode if the U.S. legalizes cannabis for recreational use at the federal level.
GTII stock is priced at 1.5 times forward sales and 19 times forward earnings, which is very reasonable. It’s also trading at a discount of 200% compared to consensus price target estimates.
Tech stocks such as Docebo
Investors with a higher risk appetite can consider buying shares of companies such as Docebo (TSX: DCBO). A company operating in the e-learning space, Docebo generates a majority of its sales from subscriptions, allowing it to deliver steady cash flows across business cycles.
The worldwide shift towards work-from-home is expected to increase demand for Docebo’s suite of products, as analysts expect sales to touch $317 million in 2024, up from $200 million in 2022. Comparatively adjusted earnings are forecast to more than double in the next two years to $0.69 per share.
DCBO stock is priced at a discount of almost 50%, given consensus price target estimates.
TSX energy stocks such as Canadian Natural Resources
Lower oil prices have dragged energy stocks lower in the last six months. But the selloff allows you to benefit from a higher dividend yield. For instance, shares of Canadian Natural Resources (TSX: CNQ) are down 18% from all-time highs but offer you an enticing dividend yield of 5%.
Canadian Natural Resources has created generational wealth for investors and has returned 1,740% to shareholders after adjusting for dividends since March 2003. Despite its outsized gains, CNQ stock is priced at less than 10 times trailing cash flows, making it attractive to income and value investors.
Its low-cost and long-life asset base should drive cash flows higher for CNQ and support dividend hikes over time. In the last 20 years, these payouts have risen by more than 20% annually.
