It’s not very often you see stocks that you’d consider “no brainers.” Markets are very complex; usually, the obviously great “companies” have very expensive shares, which reduces the return you can actually squeeze out of them. Nevertheless, there are a few stocks out there today that I consider more or less no-brainers. Following are three of them.
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TD Bank
The Toronto-Dominion Bank (TSX: TD) is a stock that I’ve owned for about five years now. At one point, I significantly reduced my ownership of it, selling about 80% of my shares, but I never once completely exited the position. In fact, I actually increased my TD shares a little bit this month, buying around $2,000 worth.
Why do I like TD stock so much? There are a few reasons.
For one thing, the company has decently fast growth for a bank, having increased its revenue by 7% per year over the last five years.
For another thing, the company has a huge U.S. business, which consists of a regular bank as well as a large investment in brokerage giant Charles Schwab. TD’s Schwab stake is worth about $13 billion, and it pays TD hundreds of millions a year in dividends.
Finally, TD has very conservative lending standards. It scrutinizes borrowers very heavily before issuing them loans. As a result, it has fairly low defaults and a very low risk balance sheet – well, as “low risk” as is possible for an ultra-leveraged industry like banking, anyway.
TSMC
Taiwan Semiconductor Manufacturing (NYSE: TSM), or ‘TSMC’ for short, is a Taiwanese semiconductor manufacturing company. It manufactures chips for giants like NVIDIA and AMD. You’ve probably heard by now about NVIDIA’s massive stock market rally. It’s up more than 200% since the start of 2022. However, NVIDIA stock is quite pricey, trading at 65 times earnings. Taiwan Semiconductor is fairly inexpensive (it trades at 25 times earnings), while giving you indirect exposure to NVIDIA’s growth.
I used to own TSMC stock, but I sold out of it after a disappointing series of revenue reports. I consider that trade to have been a mistake, and I think that TSM is still worth owning at today’s prices
Alphabet Inc (NASDAQ: GOOG), better known as Google, is a U.S. tech giant whose shares have taken a serious beating in recent weeks. The problem – as is often the problem with Google these days – was artificial intelligence (AI). Google shares dived when the company’s Gemini AI chatbot was found to be making many mistakes, both in text responses and image accuracy. Some of the errors involved controversial subject matter such as politics and history. Errors made in depicting historical figures caused some users to feel offended. CEO Sundar Pichai called this “completely unacceptable.” GOOG stock slid 4% the day the Gemini controversy broke.
The thing is, the problems with Gemini are not insurmountable. Google has fantastic AI capabilities, having invented much of the technology that went into ChatGPT. For example, it developed the “transformer” architecture that ChatGPT relies on. Obviously, this company can build good AI products; it’s just that it lost its footing with generative AI. Over time, the company’s army of genius programmers will probably figure something out. In the meantime, the sell-off has made GOOG the best value in all of big tech, trading at a mere 20 times forward earnings. That’s chump change by the standards of big tech these days, and Google still has an excellent competitive position.
