With so much uncertainty economically and geopolitically, it can be a real challenge to time when to invest in stocks. Market uncertainty can be a perfect reason not to invest. However, when is the world ever certain enough to invest?
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How to invest when times are uncertain
Frankly, no investment is ever certain. That is part of investing. You need to take some risk in order to appreciate some reward. What matters is how you manage the risks in the market and in your portfolio. You can do this in a few ways:
1. Diversify your portfolio by stock, sector, and geography. 15-20 stocks can provide ample diversification to help offset the risk of permanent capital destruction by too much concentration.
2. Pick your stock investments wisely. If you don’t want too much risk, only invest in profitable businesses. Look for businesses that have modest levels of debt. Seek companies with strong, durable products/services that are essential to their customers or society.
3. Invest rather than speculate. A stock is a stake in a real business, not a gambling chip. Buy a stock in a company like you are buying a private business for the long term. You are buying the stock for a stake in a company’s present and future earnings. Sometimes, this means you need to be patient and hold through market volatility. Some of the greatest investors have held stocks for multiple years and even decades.
If you are wondering where to invest $5,000, here are three stocks that could still have big growth potential.
A top real estate services stock to invest in
FirstService (TSX: FSV) has delivered very solid returns for shareholders over the years. Its stock is up 97% in the past five years for a 14.8% compounded annual return.
FirstService is a leader in condo/strata property management in Canada and the United States. It also has a slate of building improvement brands that have been delivering solid growth.
This company has a great track record of execution and smartly acquiring property-related companies. Its stock is down 8% this year, which could present an attractive time to invest in it.
A leading global engineering company
WSP Global (TSX: WSP) is an international leader when it comes to engineering, design, and advisory services. Its stock is up 172% in the past five years for a 22.7% compounded annual return.
WSP has built expertise across the life cycle of any significant project. Whether it be planning, construction, or asset life cycle management, WSP can provide services. As a result, it can earn a higher share and margin from the projects it takes on.
The company expects to grow earnings per share by a double-digit rate for the three years to come. If it can hit its targets, there could be attractive upside if you invest today.
A fast-growing fintech
If you are looking for a riskier investment with higher potential upside, then Propel Holdings (TSX: PRL) is a stock to look at. While this stock is up 212% in the past three years, it is down 27% this year.
Propel offers an online lending platform to the non-prime consumer market. This is a higher-risk segment, but it makes up for that risk by charging elevated interest rates. So far, Propel has been growing rapidly.
In the past three years, revenues have grown by a 51% compounded annual rate. Earnings per share have increased by a 53% compounded rate. A recent acquisition in the U.K. could certainly help continue this trend.
This stock is volatile and not for the faint of heart. After the recent decline, it looks fairly cheap. If you don’t mind the risk, this could be an interesting growth stock to invest in.
