With the TSX Index sitting at a fresh, new all-time high, investors may be wondering if it’s a better move to buy the breakout or just wait for another dip before putting money to work. Undoubtedly, it doesn’t feel all too great to buy after a sudden rebound in markets. And while the pace of recent gains (13.6% in just over a month) is unsustainable, it’s worth remembering that the stock market is a market of stocks.
There are still opportunities out there for value investors who are willing to do some digging. And while the names lacking in momentum may seem like better value plays, I’d argue there are plenty of hot names that are still capable of delivering for investors going into the second half of the year. In this piece, we’ll check out a pair of red-hot stocks that I’d be inclined to stick with as the worst of tariff fears dies down. Of course, there’s really no telling if tariff fears will pick up again.
Wall Street veteran Jamie Dimon (a smart guy who’s worth listening to) seems to think that the stock market may be a bit complacent when it comes to tariffs. Indeed, I wouldn’t be shocked if this V-shaped recovery results in further volatility going into the summer months. Either way, I’d encourage investors to be cautiously optimistic as the price of admission into various stocks rises from here.
Let’s check out two names that are hot but could have room to run as the growth narrative continues to improve with time. I’ve been a massive bull on both companies in recent years, and I’m not yet ready to change my tune since the valuations, in my view, are still not lofty enough to consider hitting that sell button.
Loblaw
Loblaw (TSX:L) has been an absolutely stellar performer since the pandemic began. It’s hard to believe, but the Canadian grocery juggernaut has gained more than 230% in the past five years. Indeed, if you sold at any point during the magnificent five-year run, you probably ended up kicking yourself as shares proceeded to march higher.
Indeed, Loblaw is a master at offering consumers a great bang for their buck. And while prices have only gone up in recent years, I think Loblaw’s cheaper brands and banners (think the No Name brand and No Frills stores) have been a great way to shelter from inflation and harsher economic times. At close to $220 per share, L stock is on the pricier side of the historical range, now going for 30.6 times trailing price to earnings (P/E).
Though I’d prefer to buy a dip, I wouldn’t be against starting a position right here, given the management’s exceptional stewardship and their sound long-term growth plan. Indeed, the demand for discount grocers in Canada seems like it’ll only march higher as tariff-induced inflation begins to impact our wallets again. Whether we’re talking about No Frills on the new No Name Stores concept, it’s hard to bet against a firm that seems to have all the wind at its back.
