2024 has been a very good year for many top Canadian stocks. At some point in 2024, there is likely to be a pullback. However, bull markets can go on far longer than you wish or imagine.
You may not want to wait forever to deploy your capital. Many successful investors find long-term value in averaging into their holdings.
Average-in to build a stock position
If there is a stock you really like but are worried about its elevated stock price, you can start by deploying a third or a quarter of a total position. As the market ebbs and flows, you can gradually add and build a larger position.
Great-quality businesses tend to trade closer to new highs than annual lows. As a result, you are likely to have to pay up for quality. Fortunately, if you can hold a stock for the long term and average in, you can build a position with an attractive cost basis.
If you are looking for some stocks to average into in March, here are three TSX stocks to consider buying with $1,000 in March.
A top software consolidator
Topicus.com (TSXV:TOI) has had a solid run in 2024. Its stock is up 24%. With an enterprise value-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio of 27, it is not a cheap stock.
Yet, the company has been doing all the right things. Like its parent company, Constellation Software, Topicus has been consolidating vertical market software businesses. Its target market is Europe.
It completed 132 million euros worth of acquisitions in 2023. It deployed 107% of the free cash flow it generated into acquisitions.
Topicus had organic revenues grow by 7% (more than Constellation). Recurring revenues grew by 10% in the year. If you don’t mind investing in a business that operates entirely in Europe, Topicus could be a great bet to average into.
A real estate services business
Colliers International (TSX:CIGI) could be another interesting company to add. Colliers just made a $300 million equity financing. The stock has pulled back since. While equity dilutes, Colliers could be in a strong position to deploy that cash into higher-margin acquisitions.
Colliers is known for its commercial real estate brokerage business. However, it has diversified into other service areas like property management, engineering/design, project management, financing, and asset management.
Colliers’s chief executive officer and founder continues to have a substantial share in the business. He must believe the financing will be long-term accretive for shareholders like himself.
Right now, the company is focused on enhancing its recurring services profile. That could lead to improved stability and profitability across its business.
A financial services stock
Another good stock to average into is goeasy (TSX:GSY). It is an attractive stock for value, growth, and income. goeasy is one of Canada’s largest non-bank lenders. It provides loan and leasing products for the non- and sub-prime consumer segment.
These are riskier customers. However, goeasy has developed an underwriting and operational algorithm to earn attractive returns on equity at moderate risk.
goeasy is enhancing its service categories into credit cards and banking products, alongside vehicle and retail lending. This should help it continue to take market share and grow profits.
This stock yields 2.77%. goeasy has grown its dividend by a high-teens rate for the past several years. It only trades at 12 times earnings ratio. It all spells an attractive long-term investment if you can be patient through the market cycles.
