TFSA investors thinking about buying the recent August dip in markets are on the right track. Indeed, any bumps in the market road are potential opportunities to top up your long-term TFSA retirement fund. Of course, savings and GICs (Guaranteed Investment Certificates) sport pretty enticing rates, at least historically speaking.
So, why take a risk on stocks at this juncture? Simply put, the higher risk accompanies a shot at a higher reward. Sure, macro risks and higher rates make it more challenging to own various stocks. But it’s worth noting that markets have already had a chance to mark down various stocks in response to the barrage of interest rate increases.
Over the long run, it’s hard to tell where rates will end up settling. Regardless, we’ll get more insight from the U.S. Federal Reserve and where it stands in its ongoing war with inflation. Anytime Fed chairman Jerome Powell speaks, markets are sure to move suddenly in either direction.
If hawkish talk continues, look for stocks to slip going into month’s end. However, if there’s a hint at the beginning of the end of the hikes, markets may have permission to move even higher from here. Either way, TFSA investors should be ready to swing their bat as September — typically a stomach-churning month for markets — approaches.
Nvidia
Nvidia (NADSAQ:NVDA) just keeps impressing, even with expectations on the higher end. The company blew away the results once again on Wednesday, helping shares rocket more than 6% in the after-hours session. This after-hours move came on a hot day when the stock surged over 3%. Indeed, not a bad day for the graphics-processing unit (GPU) and top artificial intelligence (AI) hardware play.
Only time will tell how high Nvidia can fly as it’s fresh off earnings. Personally, I’d not be shocked if the stock hits $600 per share over the near term. The firm has the AI chip that so many firms want. And as the AI boom continues, it’s hard to sit on the sidelines, even as the valuation swells.
I’d nibble into the stock here with the intent of buying more on a substantial pullback. Maybe September will offer us better prices? For now, it’s off to the races for Nvidia after smashing yet another quarter for investors.
Aritzia
On the other side of the spectrum, we have Aritzia (TSX:ATZ) stock, which cannot catch a break these days. Shares have become pretty cheap in recent quarters. Though quarterly flops are not encouraging, I continue to believe in the Aritzia brand.
Further, there’s still plenty of growth to be had, as the firm expands its footprint. Despite all the positives, Aritzia seems to be fading at the hands of the macro picture. It’s a discretionary company and will continue to be at the mercy of the economic climate.
Once the economy heats up again, I’d want to be in ATZ stock before it has a chance to boom. Down around 58% from its high, I view ATZ as severely undervalued at under 17 times trailing price to earnings.
