The S&P/TSX Composite Index has recently surged to record highs, giving investors plenty to cheer about but also a fair bit to worry over. With valuations appearing stretched in many sectors and economic headwinds still lingering, it’s natural to wonder if now is the wrong time to put new money to work.
Fortunately, there are still ways to invest without overpaying. Before I highlight a seemingly undervalued stock later in this article, let’s quickly explore some smart strategies to help you invest at all-time highs without exposing your portfolio to unnecessary risk.
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Two smart ways to invest when the market is at a high
When markets are soaring, it’s easy to feel like you’ve missed the boat. But that doesn’t mean you should stay on the sidelines. One of the smartest ways to avoid overpaying is by dollar-cost averaging. This simply means putting a fixed amount of money into the market at regular intervals. This way, you’re not betting on short-term timing, and you smooth out the purchase price over time.
Another reliable strategy is to focus on companies with strong fundamentals and consistent earnings growth. Such businesses tend to hold their value better during market downturns and recover faster when the market picks up again.
Why financial stocks are catching my eye
With inflation easing and trade uncertainty gradually taking a backseat, central banks in Canada and the U.S. are widely expected to continue lowering interest rates. That’s good news for financial companies, especially lenders and banks because falling rates typically spark more borrowing and boost loan demand.
At the same time, lower rates also reduce the cost of capital, which can support earnings growth and make such businesses even more attractive. While the financial sector did face some bumps over the past year, many stocks are now trading at attractive valuations, making this a solid hunting ground for value-oriented investors.
Why goeasy could be a great buy right now
One name I believe checks all the boxes right now is goeasy (TSX:GSY). Based in Mississauga, this company specializes in non-prime personal lending and lease-to-own financing. It’s built a strong niche by offering loans and consumer financing solutions to Canadians who are underserved by traditional, large banks.
goeasy stock is currently trading at $151.20 per share, giving it a market cap of about $2.5 billion. It also offers a solid annualized dividend yield of 3.9%, which gets paid quarterly. Despite the recent broader market rally, GSY stock is still down around 13% over the past year — making it look attractive to buy on the dip.
In the March quarter, goeasy’s revenue grew 10% year over year, the loan portfolio climbed 24%, and the charge-off rate actually declined. Meanwhile, the company continued to invest heavily in point-of-sale financing, auto loans, and secured lending. Put simply, goeasy is still growing, still profitable, and still returning capital to shareholders, all at a time when its stock looks undervalued. For investors looking to put money to work in today’s high-flying TSX, it might just be one of the best long-term buys out there.
