Tune into any financial television show these days, and you’re likely to leave feeling gloomy, perhaps even a bit afraid of what’s to come for the economy. Undoubtedly, Registered Retirement Savings Plan (RRSP) investors must always manage the risks that come their way. However, there’s a difference between managing and being prepared for risk effectively and putting yourself in a position to panic-sell well after risks have already worked their way into broader markets.
There’s no sense worrying about what’s common knowledge. In markets, you can’t get an edge over others if you’re following the herd, worrying about the Fed, rates, inflation, and other things weighing down markets. You need to be like Wayne Gretzky and focus on where the puck is headed next to make market-beating results in markets, rather than focusing on factors that may not be so useful to help you get open and score a goal.
Tips on being the “Wayne Gretzky” of investing
Indeed, Wayne Gretzky’s advice of skating to where the puck is going is applicable in many fields. As investors, being contrarian and skating to where we think the puck is headed next may not be enough. There’s a good chance you could be skating to the wrong areas. To improve your odds of skating to a zone with a high chance of getting a goal, you need to do the homework well before you lace up your skates.
In the context of investing, that means putting in the research and analysis. You should have a sound investment thesis, and, preferably, a gauge of how much you should be willing to pay for a stock. With such careful preparation, you’ll know what to do when a stock falls to levels below what you’d be willing to pay. Further, you won’t need to tune in to a lot of the near-term-focused noise that may startle you from investing in a way that helps better position your portfolio for market-beating results.
In this piece, we’ll check out two underrated stocks that look buyable for the long run.
Royal Bank of Canada
Banking volatility has hit the Big Six Canadian banks quite hard. The more U.S.-focused the bank, the harder the punishment was dealt. Royal Bank of Canada (TSX:RY) stock is down around 14% from its high. It’s on relatively stable footing versus its more U.S.-focused peers in the Canadian banking scene.
As a $177 billion behemoth, Royal Bank is one of the names to buy whenever it corrects. The bank has fallen before, only to get back to its feet faster than the pack.
At writing, shares are going for 12.1 times trailing price to earnings, with a 4.13% dividend yield. Royal stock isn’t the cheapest of the batch, but it is a rock-solid bank that’s worth the price of admission.
Manulife Financial
Manulife Financial (TSX:MFC) stock hasn’t gone too far in recent years. The stock is right back to where it was more than seven years ago. Indeed, Manulife demands investor patience. Right now, patience seems to be in short supply. The stock is back on the retreat, off 13% from its 52-week high.
At 6.5 times trailing price to earnings, MFC stock stands out as a great value play with promising long-term growth prospects. Though Asian growth is one of the main reasons to prefer the stock over peers, it will take some time before the promising growth traits work their way into the valuation.
A recession could weigh on MFC stock until then. As such, investors should ensure they’re in it for the long run before punching a ticket into the 6% yielder.
