Sometimes, the best investments are the most obvious stocks. You don’t need to be a financial genius to buy Nvidia or Microsoft. These are companies that impact your daily life, directly or behind the scenes. They enjoy good demand across industries and geographies. Are there any such Canadian no-brainer stocks you can buy without worrying about negative returns?
No-brainer Canadian stocks worth buying
Some Canadian stocks are easy investments. From the all-time favourite dividend stock Enbridge to the consumer growth stock Shopify, they have been investors’ favourites for a long time. But they have grown significantly and are trading near their all-time high.
Are there any other stocks that investors can buy right now?
Constellation Software stock
Constellation Software (TSX:CSU) stock has plunged 15% in September. Such a steep fall comes as its founder and President Mark Leonard resigned for health reasons. The stock had been on a free fall even before the news of his resignation became public on September 25. Constellation’s Chief Operating Officer, Mark Miller, will take over as President, and Mr. Leonard will remain as a Director on the Board.
Shareholders do not take management changes well, especially when the change is of the founder, as it brings uncertainty around business strategy, objectives, and work culture. Investing is first about trust and then fundamentals.
Thankfully, in the case of Constellation, the management change is not due to some board feud or financial troubles. The reason is natural, and the transition is also happening to an insider who has been working with Mr. Leonard for years. No outsider has entered the management, preserving the organization’s culture. The company continues to acquire software companies that meet its free cash flow requirements. There is no change in its compounding model.
Now is a good time to buy the stock as the dip is a reaction to the health concerns of the founder. As Mark Miller takes the helm and wins shareholders’ trust, the stock will surge.
Canadian telecom stock
Telus Corporation (TSX:T) stock has plunged 4.9% in September amidst weak economic data. These ups and downs are part of the market routine. Nothing material has changed for Telus. The company has completed its previously announced sale of non-core business Terrion for $1.3 billion, which will be used to repay debt. Moreover, the company has initiated the merger of Telus Digital into Telus Corporation, which will help it offer bundled services.
The worst seems to be over for the telco, and fundamentals are on the path to recovery as it deleverages its balance sheet, reduces capital spending, and monetizes its 5G infrastructure by cross-selling products and bundling services. Until the 3.7 times leverage ratio falls under the targeted range of 2–2.2 times its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), the dividend growth rate might be slower than the average 12.5%. This would channel its free cash flow towards repaying debt and increasing EBITDA.
Investor takeaway
The above two stocks are a good investment at the current dip. They have a robust business that generates strong cash flows. While their stock price may remain volatile in the short term, they can generate good returns in the long term.
