2 Stocks I’ll Be Adding to My RRSP – Even With the S&P 500 at All-Time Highs

Canadian stocks like the Toronto-Dominion Bank (TSX:TD) are looking cheap in 2024.

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I’m always looking for quality stocks to add to my RRSP. When searching, I usually start with the short list of stocks I already have. In fact, I haven’t added a fresh new stock to my portfolio since JD.com at the start of the year – and I sold that one in relatively short order after realizing a quick capital gain on it. So for the most part, my short lists of stocks to invest in isn’t changing. Nevertheless, the stocks I prioritize for buying sometimes change. In this article, I will explore two Canadian stocks that I will likely add to my RRSP in 2024.

TD Bank

The Toronto-Dominion Bank (TSX:TD) is a Canadian bank stock that I have been adding all year long, and will continue adding if it remains as cheap as it is now, or gets cheaper. It currently trades at $75.88, which is far below the three-year average. TD stock trades at 9.6 times earnings, 2.6 times sales, and 1.2 times book value. All of these metrics are below the TSX Index averages.

Why is TD Bank stock so cheap? Because the company is currently exposed to considerable legal risk. TD Bank is being investigated by the U.S. Department of Justice (DoJ) for money laundering. Allegedly, a TD teller in New Jersey laundered money for fentanyl cartels. This inspired the DoJ to launch an investigation into TD Bank. Later, bank employees were allegedly found engaged in similar activities in New York and Florida.

TD has already booked $615 million in fines related to the DoJ investigation it is under. Canadian bank analysts think that TD will ultimately pay out $2 billion in fines related to this DoJ investigation, future state-level investigations, and other actions.

The risks are real. However, if the fines stop at $2 billion, then TD is one of the best bargains in banking right now. It’s only if the fines and penalties spiral widely out of control into a Wells Fargo-style calamity costing $10 billion over several years that investors will lose out long term. Personally, this is a risk I’m willing to take – though I should say that TD stock is not suitable for the most risk-averse investors.

Brookfield

Brookfield Corp (TSX:BN) is a diversified Canadian financial conglomerate with operations in asset management, real estate, renewables, and insurance. This company has many things going for it. Its asset management business – Brookfield Asset Management – is considered a world-class manager. Its insurance business is growing quickly. Its renewables business is doing historic deals.

Brookfield stock is fairly cheap based on the best estimate of next year’s earnings, trading at 12 times that estimate. Of course, forward earnings are always just estimates, so don’t take that to mean too much. The stock undeniably has a low price/sales ratio, trading at just 0.7 times sales.

Brookfield has had some major successes lately. Its funds have concluded several multi-billion dollar fund raises in the last year, and one of its subsidiaries scored history’s biggest-ever clean energy deal, supplying 10.5 gigawatts of power to Microsoft. This is one stock I’ll definitely be adding if it doesn’t run up in price too much.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Fool contributor Andrew Button has positions in Brookfield and Toronto-Dominion Bank. The Motley Fool has positions in and recommends Brookfield. The Motley Fool recommends Brookfield Asset Management, Brookfield Corporation, JD.com, and Microsoft. The Motley Fool has a disclosure policy.

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