It’s been a good year to be invested in the Canadian stock market. The S&P/TSX Composite Index is up nearly 7% in 2024 and more than 10% over the past 12 months, not even including dividends.
Despite the Canadian stock market’s recent performance, there’s no need to wait on the sidelines for a pullback. There remains no shortage of discounted stocks on the TSX for Canadian investors to take advantage of.
With that in mind, I’ve put together a basket of four different companies that belong on a long-term investor’s watch list. All four stocks have a history of generating wealth for their shareholders — three of which are also trading at discounted prices.
Air Canada
Arguably the most cyclical of the bunch, Air Canada (TSX:AC), deserves serious consideration at this price.
Canada’s largest airline continues to trade far below pre-pandemic levels. Shares are down 50% since the beginning of 2020 and more than 60% over the past five years.
There’s no question that airline stocks have a reputation for being both cyclical and volatile investments. Where Air Canada separates itself from many of its North American peers is the company’s history of delivering market-beating returns.
In the decade leading up to 2020, Air Canada had largely outperformed the Canadian market’s returns.
Patient investors looking to score a massive bargain should have Air Canada high up on their watch lists.
Descartes Systems
Descartes Systems (TSX:DSG) is the one company in this basket not currently trading at a discount. The tech stock is up more than 150% over the past five years and has set new all-time highs several times this year already.
As a cloud-based logistics solutions provider, it’s not surprising that this $11 billion company often flies under the radar. It’s not exactly a market that receives a lot of fanfare.
Investors will need to pay up to own this market-beating growth stock but for good reason. Descartes Systems is a sound business with plenty of growth still left in the tank.
Bank of Montreal
When it comes to building wealth, dividend stocks are a great route to take. The TSX is loaded with high-yielding dividend stocks with payout streaks spanning decades and longer.
At a dividend yield that’s just shy of 4.5%, Bank of Montreal (TSX:BMO) isn’t the highest yield you’ll find. It is, however, one of the most reliable.
The Canadian bank has been paying a dividend to its shareholders for nearly 200 consecutive years.
Passive income investors cannot go wrong with buying any of the Big Five today. If your priority is reliability though, BMO would be my suggestion.
Northland Power
Last on my list is a beaten-down renewable energy stock.
Northland Power (TSX:NPI) offers investors the chance to earn both passive income and market-beating returns, at a discounted price, too.
Excluding dividends, shares are down a whopping 50% since early 2021, which was when many others in the sector also began declining. Still, Northland Power had a track record of delivering market-beating returns before 2021.
One silver lining is that the pullback in price has sent the dividend yield soaring. At today’s stock price, Northland Power’s dividend is yielding above 5%.
With the renewable energy space still largely in its early stages, now could be an incredibly opportunistic time for a long-term investor to be loading up on a company like Northland Power.
