After the recent market correction, Canadian stocks have become more attractive. Valuations have come down, dividend yields have risen, and long-term growth potential remains intact. For investors thinking beyond short-term volatility and toward building generational wealth, this could be an excellent buying window.
Stocks have historically outperformed other asset classes in the long run. By thoughtfully allocating $15,000 across small-, mid-, and large-cap Canadian stocks, investors can position themselves to benefit from both capital appreciation and income. A diversified allocation might look like this: 10% in small caps ($1,500), 30% in mid-caps ($4,500), and 60% in large caps ($9,000).
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Small-cap potential: Savaria
Small-cap stocks — typically defined as companies with a market cap under $2 billion — can offer outsized returns, though with higher risk. Savaria (TSX: SIS) is a compelling example. Trading at $15.52 per share at the time of writing, Savaria has a market cap of around $1.2 billion and is down approximately 35% from its 52-week high. This pullback offers a potential buy-the-dip opportunity.
Savaria designs and manufactures accessibility products such as stairlifts, home elevators, wheelchair lifts, and accessible vehicles. It operates globally, with a strong presence in North America and Europe. Its growth is fueled by demographic trends, particularly aging populations and the rising demand for mobility solutions. The company has also expanded strategically through acquisitions.
Investors are paid while they wait for a rebound, thanks to a monthly dividend yielding nearly 3.5%. Analysts believe the stock is undervalued by about 35%, implying a potential upside of more than 50% if it returns to previous highs.
Mid-cap resilience: Exchange Income
Mid-cap stocks (market caps between $2 billion and $10 billion) strike a balance between growth and stability. Exchange Income (TSX: EIF) is a good example, currently trading at $47.52 per share with a market cap near $2.6 billion. The stock is down 20% from its 52-week high, presenting an attractive entry point.
Exchange Income owns a diversified group of businesses in aviation and aerospace, and manufacturing, including regional airlines, medevac services, and aerospace maintenance firms. Its manufacturing arm includes precision metal fabrication and communications technology companies. Since 2004, the company has consistently paid monthly dividends backed by stable cash flow and disciplined acquisitions.
At current levels, the stock yields an attractive 5.6%, and analysts estimate the stock trades at a 32% discount, pointing to a potential upside of roughly 47%. Over the past decade, it has delivered impressive annualized returns of 15.7% — proof of its resilience and creation of shareholder value.
Large-cap stability: Brookfield Infrastructure Partners
For large-cap exposure, Brookfield Infrastructure Partners (TSX: BIP.UN) offers a powerful combination of growth, income, and global diversification. At $38.30 per unit, it sports a generous 6.2% yield and trades at a 28% discount, based on the analyst consensus price target.
BIP owns and operates critical infrastructure around the world, including electricity transmission lines, gas pipelines, rail networks, data centres, telecom towers, and ports. Its diversified segments — utilities, transport, midstream, and data — generate steady, inflation-resistant cash flows.
In a bold move this month, BIP (and its institutional partners) agreed to acquire Colonial Pipeline, the largest U.S. fuel transportation system, for US$9 billion, including debt. This acquisition reinforces its strategy of acquiring essential assets at attractive valuations—laying the foundation for long-term, compounding returns.
The Foolish investor takeaway
With $15,000, a thoughtful allocation across small-, mid-, and large-cap Canadian stocks like Savaria, Exchange Income, and Brookfield Infrastructure could offer the right blend of growth, income, and stability. For investors looking to build generational wealth, these names provide a solid start with attractive entry points and the potential to outperform over the long haul.
