October has been a decent month for the TSX so far. The overall market has remained healthy and reasonably bullish. Some stocks have appreciated faster than others. But the growth rate isn’t the only metric for choosing the right stock in October.
A few stocks have remained bullish for a few months and have the markers of healthy, long-term, reasonably positive momentum.
Two such stocks should catch the eye of investors looking to capitalize on the current bull market.
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A utility company
Calgary-based ATCO (TSX: ACO.X) has a diversified business model. Its individual businesses include power and natural gas (locally and internationally), logistics and infrastructure, and port operations. However, the bulk of its revenues (about 73%) still come from its utility (electrical power and natural gas) operations.
This diverse business sets it apart from other utility companies. It’s a healthy combination of the stability/consistency that utility businesses promise with exciting growth opportunities associated with its infrastructure and logistics business.
ATCO is one of the oldest dividend aristocrats in Canada and has been growing its payouts for close to three decades. It also has a controlling share in Canada’s oldest dividend aristocrat, Canadian Utilities. The company is currently offering a healthy 4% yield.
But the reason I plan on buying this stock is the bullish trend it has been on in the last few months, which has pushed its valuation up 25% in the last four months. If there is even a decent chance that this bullish trend will continue at the same momentum, it’s worth taking.
An infrastructure company
US-based and TSX-listed Brookfield Infrastructure (TSX: BIPC) is another compelling stock investors should consider in October. Its fundamental strengths are reason enough to make it a compelling choice and the current performance is simply icing on the cake.
One of them is its portfolio mix. Unlike traditional infrastructure-related businesses that focus on classic infrastructure (transportation, construction, energy, etc.), Brookfield Infrastructure is heavily invested in data. It has a sizable portfolio of data centres in multiple countries.
Thanks to the recent advances in AI and a massive demand for computing power, data centres have become a hot commodity, and Brookfield Infrastructure is well-positioned to take advantage.
This has been one of the reasons behind the stock’s impressive growth in the last 12 months. It climbed over 48% over that period and at that pace, it can double your capital in a little over two years.
Foolish takeaway
Despite having impressive business models that are at least partially sheltered against market headwinds, the two have displayed performance tendencies often associated with cyclical stocks. But the current momentum is positive and the stocks might continue growing for a sufficient enough duration for the current investment to be well worth it.
