The TSX is in a healthy bull market phase. In just one month, the index has gone up about 5.4% and while not all sectors are moving in the same direction and at a comparable pace, many are. So, it’s a good time for investors to look into some of the sufficiently bullish stocks in the market.
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An investment management firm
If you looked into the performance of this stock about two months ago, Onex (TSX: ONEX) would have most likely repelled you with its bearish trend and low yield. Things haven’t gotten better for the dividend as the yield is still quite low at 0.4% but the stock has turned things around. In the last 30 days, the stock has risen by about 10% and considering the trajectory, it may keep on going for a while.
Its valuation is another thing that makes it an appealing pick. The price-to-earnings ratio is just 6.9, making the stock quite undervalued. The probability that the stock might keep rising until it reaches a healthy/fair valuation is quite decent.
The company has been investing its investors’ and institutional investors’ money in good businesses for almost four decades. It currently has about $49 billion in assets under management (AUM) and a portfolio of about 42 different companies hailing from a range of sectors.
An insurance company
Intact Financial (TSX: IFC) is a far more appealing choice for growth, not only because of its stellar and impressive performance history but also its consistency. Unlike life insurance giants that dominate the insurance segment in the TSX and bank stocks that offer a reasonable mix of dividends and growth, IFC leans heavily towards growth.
This property and casualty (P&C) insurance giant (in Canada and in Ireland) has been going up almost consistently since it joined the TSX. As a result, its long-term growth numbers are impressive, and it has returned over 350% to investors in the last decade (including dividends).
However, the best part is that the momentum is staying strong. The stock has nearly doubled its market value in the last five years (93% appreciation). The returns in the previous 30 days are not as compelling as those of Onex, but considering its history, its long-term growth prospects are better. Plus, it’s also offering a more meaningful yield of about 1.8%.
Foolish takeaway
The two stocks have their characteristic strengths, both as short-term and long-term buys but one thing common between the two is that both of them should be considered for the capital appreciation potential, not their dividends. Both of them may benefit from the overall bullish trend of the market but it’s critical to also look into their sector-specific growth or fall catalysts.
