Young investors really do have time on their side. Indeed, time is arguably one of the bigger advantages when it comes to the investing world. That means you can be knocked down by a sudden stock market correction or crash and still have what it takes to recover. Indeed, if you stick around long enough to ride the eventual recovery (it could take a few years), you may wish to allocate your portfolio towards those high-on assets (like stocks) that can give you a good bang for your buck for the long haul. Either way, young growth investors shouldn’t seek to take risks just for the thrill of it.
If it can be avoided or if there aren’t additional rewards that go along with taking a hefty risk (let’s say placing a big bet on a meme coin that’s trending), investors should seek to steer clear. Either way, I’m a big fan of growth stocks in this environment, especially the ones that most of Wall Street don’t view as potential AI beneficiaries. Of course, the artificial intelligence (AI) boom could take a lot longer to produce the type of growth that would warrant a massive multiple expansion-driven type of rally.
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Young investors can take a market hit!
Either way, young investors who can put up with those 20%, 30%, or even 50% declines every so often should be ready to pursue the growth opportunities in this market, preferably at slight discounts whenever the market takes a bit of a mild hit to the chin.
Remember, if you’ve got decades to invest and no timely expenditures soon, you should take the smart risks that can help jolt your Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) fund over the long haul. And if you do happen to take a big fall after buying a stock, averaging down on weakness may very well help you recover a bit faster.
Of course, that requires having some cash on hand. And given many of today’s young investors have yet to pull in all too much cash (their prime earning years are likely still many years away), I’d argue that any coming paycheques could be used to purchase shares of wonderful firms on those inevitable market dips. So, if you’re a young investor, the following growth stock looks worth adding to a portfolio.
CP Rail
Shares of CP Rail (TSX: CP) or CPKC, as some now refer to the firm, may not be a typical growth firm. But as far as the rails go, it’s fairly “growthy,” especially following the acquisition of Kansas City Southern’s assets.
As the rail industry looks to rebound in the coming years, I’d argue that CP may make sense to pursue, especially if you think Donald Trump won’t follow through with his tariffs on Canada and Mexico. Though timing a rail rebound could be difficult, I’m a fan of the growth profile and the 30.36 times trailing price-to-earnings (P/E) multiple on CPKC shares today.
Sure, it’s very expensive as far as rails go. But if the firm can keep operating at a high level and if tariff jitters fade with time, the latest spike in the stock may be the start of something more substantial. Either way, young investors may wish to stick with the dividend grower for the long haul, even if the growth rate has stalled of late. In the long term, I think growth could get a jolt as the economy gets back into rapid expansion.
