Stocks decline for a variety of reasons. Sometimes, they fall because of a negative company-specific event. Other times, they fall for other reasons related to investor psychology — worry and fears that are misplaced.
In this article, I will share two stocks with you that are on my list of stocks to buy whenever they fall below a certain level. My focus is on the long term, and my opinion of where the stocks will be trading in five to 10 years. With this in mind, let’s take a look.
Enbridge stock
Enbridge (TSX:ENB) is one of Canada’s leading energy infrastructure companies, transporting and distributing oil and gas in its extensive North American pipeline system. In fact, Enbridge moves about 30% of North America’s crude oil. It also transports nearly 20% of the natural gas consumed in the U.S.
As you can see, Enbridge’s infrastructure network is at the heart of North America’s energy grid. It’s an integral part of powering our days at home and at work. Thus, the business has a strong long-term outlook.
Recently, the company acquired three U.S. natural gas utilities that will provide additional low-risk, regulated revenue. These transactions will help strengthen Enbridge’s balance sheet and provide predictable and reliable cash flows.
Today, Enbridge stock is looking highly attractive and undervalued. It has fallen 15% from its January highs and it trades at 16 times this year’s expected earnings. In my view, this presents us with an attractive opportunity. The business is de-risking, and the stock is on sale. Enbridge is one of the best stocks to buy right now if you’re looking for value.
TD Bank stock
As interest rates and inflation rose, and the consumer became increasingly strained, banks like Toronto-Dominion Bank (TSX:TD) got hit. In fact, TD Bank stock is down a full 12% since January.
On the one hand, the Canadian banks are famously resilient in the long run. So, this decline has me interested. On the other hand, I’m very aware of the troubles brewing in the macro environment. I’m concerned when I analyze the consumer and the prospects for consumer spending. Therefore, looking ahead, I see an elevated likelihood of more pain before it gets better.
Yet, the argument can certainly be made that TD Bank stock is undervalued from a long-term perspective. This leads to the question of whether now is the right time to buy. For some investors, getting in now might be the right decision. This would give access to TD’s 5% dividend yield and any upside that might come in the near future.
For me, however, I would rather wait it out — wait for the economy and the market to adjust to the higher interest rates, which may stay higher for longer than investors expect.
The bottom line
My list of stocks to buy when they go on sale includes Enbridge stock and TD Bank stock. Both of them are hallmarks of the Canadian economy. They have positive long-term outlooks and their stock prices have been resilient over time, with growing dividends and shareholder returns.
I think Enbridge is one of the best stocks to buy right now, while I think TD Bank stock might have lower to go before it inevitably becomes a great buy.
