There are few things more appealing than a stock that you can count on for a lifetime. Much of the stress we experience in the markets comes from not being sure when to buy and sell stock. Wouldn’t life be easier if you could just hold the same stock for life and not have to worry about all that?
Occasionally, stocks come along that offer that kind of consistency. Berkshire Hathaway under Warren Buffett is one example, having delivered higher returns with less volatility than the S&P 500 Index. Another good example is Coca-Cola. Those are U.S. stocks, but there are Canadian names that offer similar promise. In this article, I will explore three TSX stocks that might just be worthy of a lifetime holding period.
Brookfield
Brookfield Corp (TSX: BN) is a Canadian financial conglomerate involved in asset management, renewables, real estate and insurance – among other things. It is best known for asset management, although a chunk of that business was spun off and listed separately from Brookfield, as I’ll explain in the next section.
What makes Brookfield promising is its reputation. Brookfield has a great name, which results in it being offered deals that a lot of other Wall Street firms would never get access to. As a result of its stellar reputation, one of Brookfield’s partially owned subsidiaries was able to score the biggest clean energy deal in history, which will see it supply Microsoft with 10.5 gigawatts of power.
Brookfield stock is pretty cheap by some estimates. Going by analysts’ estimates of the next 12 months’ earnings, it has a forward P/E ratio of 12. If those estimates turn out to be right, then Brookfield will someday prove to have been a buy at today’s prices.
Brookfield Asset Management
Brookfield Asset Management (TSX: BAM) is Brookfield’s partially owned asset management subsidiary; the “spun off” BN asset manager alluded to earlier. BAM is ultra-profitable, with a 45% net income margin (a form of profit margin) and a 19% return on equity.
Brookfield Asset Management is theoretically ‘safer’ than Brookfield. It has nearly no debt, whereas Brookfield has a lot of debt. It also has higher margins than Brookfield has. The downside is that it has no exposure to Brookfield Insurance, which is the fastest-growing part of the whole Brookfield universe. I personally find Brookfield the more intriguing opportunity of these two today, but BAM is definitely a good dividend play.
CN Railway
The Canadian National Railway (TSX: CNR) is Canada’s largest railroad company. The transnational railway ships $250 billion worth of goods across North America each and every year. On a massive three-coast rail network, it ships oil, grain and timber. These goods will always be in demand, and trucks are more expensive than trains, so CNR will always have a steady book of business. CN Rail has only one Canadian competitor, which gives it a lot of pricing power and high profit margins.
CN Railway encountered some setbacks last year. Its revenue declined as a comparatively weak oil market led to lower crude-by-rail fees. The most recent quarter saw revenue decline less than it had in prior quarters, so we’re already seeing signs of a turnaround. I’d feel comfortable holding this stock for a very, very long time.
