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Premium content from Motley Fool Stock Advisor Canada
Fellow Fools,
If the investing word-du-jour a few weeks ago was “DeepSpeak,” now the word on everyone’s lips is “tariffs.”
And of course investors have lots of questions about the tariff situation and how it will all play out, especially for the companies that my team at Stock Advisor Canada and I have recommended.
The problem is, we have no idea.
Nobody does — not even the people who are directly involved in playing the tariff game.
Earlier this month, we weathered a single day when tariffs were a go at market open and no longer by the time North American markets closed. But if that day taught us anything, it’s that we might be in for a four-year stretch where a fly-by-the-seat-of-the-pants policy is in play.
Applying this to the stock market, my read is that we’d better mentally prepare for volatility. Throw in the fact that the U.S. market is at the upper end of its historical valuation range and is rather top-heavy, and the table is set for market schisms.
The good news is that market volatility equals opportunity, Fools! It’s just a matter of preparation.
Part of the preparation is having companies that you’re familiar with and ready to buy when the opportunity presents itself. Maybe it’s today. Maybe it’s at some point in the future. And Stock Advisor Canada is very much here to help with that pursuit.
Here, we’re highlighting five stocks that we think you can at least begin building positions in — right now.
Emphasis was added because cautious, Foolish investors know to build toward a full position. This is in contrast to a more binary — and I fear, more oft-followed — practice of buying a full position in one fell swoop.
Bottom line: We’re of the mind that each of these companies is well suited to navigate whatever is thrown its way in the years ahead and that buying some of each today is warranted at current prices.
Enjoy!
Foolishly yours,
Iain Butler, CFA
Advisor, Stock Advisor Canada
“Best Buys Now” Pick #1:
Brookfield Renewables (TSX: BEP.UN)
Brookfield Renewables (TSX: BEP.UN) provides a current dividend yield of ~6.8%, and that dividend will almost assuredly grow in the years ahead.
In addition, the business itself is likely to grow in the neighbourhood of 10% annually. Toss in a multiple that’s in line with the historical average, and there’s a strong case to be made that Brookfield Renewable investors are going to earn a ~15% annualized total return over the next five years. This means we’re looking at about a double over that period. Our bet is that’s better than what the market will provide.
Digging in a touch, there’s a lot simmering under the Brookfield Renewables hood. Capital deployment of $1.8 billion in 2024, net, was a record, and management anticipates more of the same in 2025. Demand for power seems headed in one direction, and there is plenty of appetite for the green variety that Brookfield Renewables serves.
Big tech is pushing on the demand side of the equation, and while BEP’s deal with Microsoft (NASDAQ: MSFT) made headlines, there’s likely more where that came from.
Policy shifts are omnipresent in the world of renewables, and it’s likely that’s what’s playing into our current opportunity. There will be more noise along these lines in the years ahead, but the long-term demand for energy isn’t likely to abate. For those able to tune out the noise, the aforementioned total return formula should ring approximately true.
