Beginning Investors: 3 TSX Stocks I’d Buy With $500 Right Now

The time is ripe as the TSX is down. If you have $500, now is the right time to buy these fundamentally strong growth stocks at a discount.

| More on:
A worker gives a business presentation.

Source: Getty Images

Tension is brewing as the stock market awaits a U.S. Fed rate cut. The TSX Composite Index pulled back 2.5% in the first week of September over concerns of a recession in the United States. The U.S. jobs data was weaker than expected, with 142,000 jobs added in August against the expected 160,000. The Fed closely monitors U.S. jobs data to determine the interest rate. In early August, weak jobs data increased fears of recession and pulled down the market.

At times like these, beginner investors have an opportunity to buy fundamentally strong growth stocks at heavy discounts.

Three TSX stocks to buy right now

Here are three TSX stocks you could consider buying to begin your stock market journey.

Shopify stock

Shopify (TSX:SHOP) stock has dipped 11% to around $91 amid the macro concerns, creating an opportunity to buy the dip. The dip has nothing to do with the company’s fundamentals. Shopify has been focused on turning profitable and even managed to report a net profit of US$171 million in a non-seasonal quarter (June 2024 quarter). It continues to grow its revenue by mid-single digits.

A recession or an economic slowdown could directly impact its holiday season sales as consumers would spend less. Nevertheless, Shopify’s asset-light model gives it sufficient liquidity to withstand a downturn. Moreover, its growing outreach will help it capitalize on e-commerce adoption in the 5G digital age, where you will have more means to shop online. At present, you can shop online using a mobile and laptop. But in the artificial intelligence (AI)-enabled world, you can shop using home appliances, cars, and AI assistants.

On the valuation front, Shopify stock is overvalued at 51 times forward price-to-earnings ratio. However, it has ample room for growth in the long term, driven by the growing digital presence.

Dye & Durham stock

Practice management software Dye & Durham’s (TSX:DND) stock price has slipped 5.7% to $13.25 on the macro news and slightly weaker earnings. The company’s Unity platform helps legal practices and banks conduct due diligence on property. It has partnered with National Bank, one of the Big Six Canadian banks, to provide a nationwide property settlement offering. DND will offer real-time property exchange tracking to enhance property settlement. This new offering will expand DND’s client base into the real-estate value chain, making its solutions stickier.

The company is operating at a 57% margin but is still reporting a net loss because of high finance costs on its $1 billion-plus debt and the failed acquisition of TM Group. However, the company has been reducing its finance costs gradually. The upcoming interest rate cuts and DND’s debt repayment could reduce the finance cost further and make the company profitable again.

The stock is a value buy at 2.28 times its price to book value per share ($5.83), as a reduction in debt will enhance the book value of equity. 

Descartes Systems

Another software stock Descartes Systems (TSX:DSG) is a resilient stock that you can consider buying whenever it falls. The nature of its business of logistics services and supply chain management solutions makes it a defensive stock. While the company’s operations are affected by economic and geopolitical issues, its revenue continues to grow at an average rate of mid-teens. Its platform is sticky and has a wide consumer base spread across verticals. This software-as-a-service company has not only turned profitable but has also increased its profit margins to 21% from 15% in FY21.

The takeaway

All three stocks are buy-and-hold options for the long term. They can give you strong capital appreciation and double your investment in the next five years.

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.

The Motley Fool has positions in and recommends Dye & Durham and Shopify. The Motley Fool recommends Descartes Systems Group. The Motley Fool has a disclosure policy. Fool contributor Puja Tayal has no position in any of the stocks mentioned.

More on Stocks for Beginners

woman looks out at horizon
Stocks for Beginners

Here’s How Much Canadians at 35 Need to Retire

If you want to create enough cash on hand to retire, then consider an ETF in one of the safest…

Read more »

Concept of multiple streams of income
Dividend Stocks

Got $10,000? Buy This Dividend Stock for $4,992.40 in Total Passive Income

Want almost $5,000 in annual passive income? Then you need a company bound for even more growth, with a dividend…

Read more »

RRSP Canadian Registered Retirement Savings Plan concept
Dividend Stocks

Watch Out! This is the Maximum Canadians Can Contribute to Their RRSP

We often discuss the maximum TFSA amount, but did you know there's a max for the RRSP as well? Here's…

Read more »

a person looks out a window into a cityscape
Dividend Stocks

1 Marvellous Canadian Dividend Stock Down 11% to Buy and Hold Immediately

Buying up this dividend stock while it's down isn't just a smart move, it could make you even more passive…

Read more »

Blocks conceptualizing the Registered Retirement Savings Plan
Dividend Stocks

CPP at 70: Is it Enough if Invested in an RRSP?

Even if you wait to take out CPP at 70, it's simply not going to cut it during retirement. Which…

Read more »

worry concern
Stocks for Beginners

3 Top Red Flags the CRA Watches for Every Single TFSA Holder

The TFSA is perhaps the best tool for creating extra income. However, don't fall for these CRA traps when investing!

Read more »

Data center woman holding laptop
Dividend Stocks

Buy 5,144 Shares of This Top Dividend Stock for $300/Month in Passive Income

Pick up the right dividend stock, and investors can look forward to high passive income each and every month.

Read more »

protect, safe, trust
Stocks for Beginners

2 Safe Canadian Stocks for Cautious Investors

Without taking unnecessary risks, cautious investors in Canada can still build a resilient portfolio by focusing on safe stocks like…

Read more »