The Canadian stock market remains on its gradual climb upward to return to all-time highs. The S&P/TSX Composite Index is up a couple of percent on the year and is now trading less than 5% below all-time highs that were set in early 2022.
While the market may be hot right now, there’s still lots of value for Canadian investors to capture. The TSX is loaded with stocks that continue to trade at discounted prices.
With that in mind, I’ve put together a well-diversified basket of three TSX stocks. All three companies offer something a little different, making the basket a great buy as a whole for anyone looking to put some cash to work in the Canadian stock market today.
Stock #1: Descartes Systems
As did many other tech stocks, Descartes Systems (TSX: DSG) had a rebound year in 2023. Shares outperformed the market last year and are now trading just below highs that were set earlier this year.
At one point in 2022, the stock price had been nearly cut in half from where it was in late 2021. But after a monster run that began in late 2022, Descartes Systems is now up a market-crushing 150% over the past five years. In comparison, the Canadian stock market has returned less than 40%, excluding dividends.
If you’re looking to add some market-beating growth potential to your portfolio, Descartes Systems is the stock you’re looking for. The company is young enough to remain loaded with growth potential yet mature enough to own a dependable market-beating track record.
Stock #2: Bank of Nova Scotia
There are more reasons than one to have a bank stock on your watchlist right now. Value and passive income are the two of the top reasons for me.
At a 6% dividend yield, not only is Bank of Nova Scotia (TSX: BNS) the highest-yielding of the Big Five, but it’s also the only one currently yielding above 6%. In addition to that, the bank has been paying a dividend to its shareholders for close to 200 consecutive years.
From a passive-income perspective, there aren’t many better options on the TSX than Bank of Nova Scotia.
Where the value play comes in is from the bank stock’s recent pullback. Excluding dividends, shares are down nearly 30% since the beginning of 2022. That puts the bank stock behind the market’s returns over the past five years.
The banking sector has been a reliable one for Canadians for decades. It’s also been notoriously cyclical.
If you’ve been waiting to pull the trigger on a bank stock, now could be an excellent time for a long-term investor to do so.
Stock #3: Brookfield Renewable Partners
To balance out this basket of stocks, I’ve included a company that offers the best of the best worlds.
At today’s stock price, Brookfield Renewable Partners (TSX: BEP.UN) is yielding a very impressive 6%. In fairness, that’s largely due to the renewable energy stock being down close to 50% since the beginning of 2021. The yield will naturally drop as the stock gets back on to its market-beating ways.
Despite shares being on the decline for basically the past three years, Brookfield Renewable Partners has still managed to outperform the market over the past five years. And that’s not even including dividends, either.
Long-term renewable energy bulls do not want to miss this buying opportunity.
