Don’t look now, but the TSX Index is right back at new all-time highs after gaining more than 14% since those lows in April. Undoubtedly, that’s not a bad return in just over a month! Such explosive gains came out of perhaps one of the scariest market moments since the COVID crisis began in February 2020. Like the 2020 sell-off, the Trump tariff correction proved a fantastic buying opportunity for those ready (with cash on the sidelines) and willing to buy the dip despite the scary headlines and worries that trade with the U.S. would evaporate in the coming months.
With Trump dialling things back with tariff pauses and productive discussions, it seems like a disastrous scenario can be avoided after all. As it turned out, the dip-buyers won in a big way once again.
And while the opportunity to snag the best bargains has come and gone (the window to load up on the bargains was rather small, given the V-shaped recovery), I still think there are a few names that look cheap with plenty of upside as the TSX Index picks up where it left off around two months ago.
However, whether the TSX Index and S&P 500 can make up for lost time remains to be seen. Indeed, another year of generous double-digit percentage gains would be nice. And though it seemed impossible a month ago, as Liberation Day tariffs horrified many, it seems to be back in play.
In this piece, we’ll check out two interesting stocks worth buying, even as the TSX returns to full-on bull market mode.
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Constellation Software
Around a month ago, I was pounding the table loudly on shares of Constellation Software (TSX:CSU) as they sank closer to $4,000 per share. Indeed, the tech sector had a front-row seat to the tariff tumble. And while Constellation shares were overdue for a correction, I found that the strong fundamentals and limited tariff exposure didn’t really align with the magnitude of the more than 14% drop it ended up suffering.
And while shares of the diversified software firm seldom go for cheap, I think that any slight discount you can get on the durable long-term grower is worth going for. Today, shares are close to $5,000 per share again. As the firm gets more active on the M&A front from here, I think those seeking durable growth in the artificial intelligence revolution should think about picking up one share of the name if they’ve got a spare $5,000 or so.
It’s a high-priced stock and one that goes for a premium. But with another strong quarter of growth (sales soared 16% in the fourth quarter) in the books and room to make a bigger splash on the acquisition front amid the recent wave of volatility, CSU stock is a name that’s a must-watch for growth-focused value investors.
The Foolish bottom line
The TSX Index is right back to all-time highs. And while Constellation shares aren’t too far off from their own record heights, I’d still be inclined to buy a share or two as the pace of acquisitions picks up again. The company has a strong balance sheet and a knack for bringing out the best in the small software gems it sets its sights on. Perhaps buying one share at $5,000 with the intent of buying another at $4,000 on a pullback could make sense at a time like this, as investors seek to rotate from value and defensiveness back into growth.
