As we are near the end of 2024, it’s time to revisit our investments and financial goals. Investing continuously and staying invested is what generates wealth in the market. Has that stock on your watchlist reached your price point, but you did not have the money to invest in it? You can approach this problem differently. Instead of waiting for the stock to reach your price point, look for stocks that are a good buying option when you have the money to invest.
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Top sectors with good buying opportunities
A stock that was a “buy” three months ago may no longer be a “buy” as its price could have surged. Hence, it is important to scout for stocks that are undervalued or have the potential to grow. Every economic cycle has gainers and losers. The current economy has two winners, automotive and real estate. And if you are looking from a long-term perspective, telecom and technology are good investments.
The automotive and real estate sectors were the losers in the high-interest rate environment. The rising borrowing costs made these high-ticket items unaffordable for an average Canadian even after taking a loan. However, the cycles are reversing, and I have two reasons to be bullish on them.
- Falling interest rates could revive borrowing activity.
- Trump’s presidency could drive demand for gasoline and hybrid cars, given that demand for cars has subdued for the last three years.
Two Canadian stocks to buy right now with $1,000
If you have $1,000 to invest, you could consider investing in the below two stocks.
Magna International stock
Magna International (TSX: MG) stock has been in a downtrend since the beginning of 2022 as multiple factors affected the overall automotive sector. The semiconductor shortage lengthened the car delivery timelines, increasing inventory costs for automakers and component suppliers like Magna. The pending orders were fulfilled in 2023, which drove Magna’s sales up 13% to $42.8 billion, its highest in more than five years. Despite this, Magna’s stock showed no upside as the 2024 automotive demand outlook was subdued due to high-interest costs.
However, the stock has seen a recovery since September when the U.S. Fed began rate cuts. The United States is one of the largest automotive markets, and a hope of recovery drove Magna’s stock up 20% in three months. There is more room for growth as automotive demand picks up in 2025. I expect the stock to reach a price of $100 price, representing a 50–55% upside.
Magna’s stock can give you capital appreciation and a dividend of $2.68 per share. A $500 investment could grow to $750 in the next two years and earn you $42 in total dividends.
CT REIT
CT REIT (TSX: CRT.UN) is another attractive buying opportunity at a price point below $18. The REIT is the real estate arm of Canadian Tire, which sells automotive, hardware, sports, leisure, and housewares at its retail stores. An uptick in discretionary spending could fuel the retailer’s expansion plans and CT REIT would help it execute them by developing new stores. CT REIT acquires, develops, and leases stores to Canadian Tire.
The new properties earn a higher rental income, used to pay for future developments and give distributions to unitholders. The REIT’s unit price is trading at a 17% discount from its 2022 price of $18 as the real estate prices fell. The fair market value of CT REIT’s portfolio fell and so did its unit price. As the real estate value recovers, the REIT unit price will increase. Its unit price has already recovered 11%.
A $500 investment in CT REIT can earn you $30.70 in distributions per share. You can expect 20% capital appreciation over the next two years and a 3% annual distribution growth.
