Down 25% in the Last 3 Months, Is Brookfield Infrastructure Stock a Buy Today?

Brookfield Infrastructure is highly defensive but also an ideal growth stock, making it one of the best to buy while it trades so cheaply.

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Over the last few months, the sell-off in stocks has picked up again, with many well-known and high-quality Canadian stocks losing significant value. It’s not just the higher volatility stocks that are selling off, though. Even some highly defensive stocks, such as Brookfield Infrastructure Partners (TSX:BIP.UN), have seen their share prices fall dramatically.

As you can see from the chart above, Brookfield has struggled in recent months. In fact, in just the last three months, the stock price has declined by roughly 25%. And today, Brookfield trades more than 30% off its 52-week high.

So given that Brookfield Infrastructure owns essential infrastructure assets and Brookfield companies are well-known to have impressive management teams, the stock trading significantly undervalued offers a substantial opportunity.

Not only can Brookfield infrastructure stock help shore up your portfolio and provide you with reliable passive income, but it also has impressive long-term growth potential.

So while Brookfield Infrastructure stock continues to trade at these unbelievably cheap levels, now is certainly the time to consider if the stock is a good fit for your portfolio.

Why is Brookfield Infrastructure one of the best stocks to buy now?

In this uncertain market environment, it’s essential to own stocks that you have confidence can weather the storm. These stocks are paramount to own because when you have confidence in your portfolio holdings, you will be much less inclined to panic and sell your investments should they continue to temporarily lose value.

Market sell-offs happen from time to time. So avoiding the impulse to sell your stocks during these periods and instead adding to your positions is crucial. And Brookfield is one of the best stocks to add to your portfolio for exactly that reason.

Brookfield Infrastructure stock has four main operating segments. First off is utilities, which is well-known by many investors as one of the most defensive industries due to the significant government regulation and importance of electricity and gas transmission.

On top of its utilities segment, Brookfield has a midstream energy segment. This includes infrastructure assets such as pipelines and storage facilities.

Transportation is another major industry that Brookfield has invested in, owning assets such as ports, railroads, and toll roads.

Finally, its last segment, and one that has been growing quite rapidly in recent years, is data. This includes assets such as telecom towers and data centres.

What’s most impressive about Brookfield Infrastructure stock, though, is that in addition to the natural diversification it already has with assets in four separate segments, it’s also diversified globally with businesses and operations spread all over the world.

This helps to minimize potential risk, even as a defensive infrastructure business. Moreover, it offers more potential for growth as different regions could experience different levels of growth at different times.

How cheap is the infrastructure giant today?

Considering how well it’s diversified and what an impressive management team Brookfield has, BIP.UN is clearly one of the top Canadian stocks to consider adding to your portfolio and holding for years to come.

But in this environment, with so many opportunities to buy stocks undervalued, it’s also essential to take advantage of some of the most significant discounts on the market.

Luckily for investors, though, with Brookfield trading a little over 30% off its 52-week high, it’s exceptionally cheap, especially for such a high-potential business.

Right now, Brookfield Infrastructure stock trades at a forward price to funds from operations (FFO) of 8.1 times. Meanwhile, its three- and five-year average P/FFO ratio is 13.7 and 13.2 times, respectively.

Plus, the stock has a current distribution yield of 5.8%. Meanwhile, over the last five years, it has averaged a yield of just 4.3%, showing what a significant opportunity investors have to buy the stock today. Not to mention, Brookfield aims to increase that distribution by 5% to 9% each year.

Therefore, while this high-quality and reliable Canadian stock trades at such a compelling discount, it’s certainly one of the best stocks you can buy today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Daniel Da Costa has positions in Brookfield Infrastructure Partners. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.

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