Many investors are interested in fast-moving stocks. The theory behind buying such stocks is that rapid price appreciation predicts more rapid price appreciation in the future. In fundamental terms, this is incorrect: you want to pay the lowest possible price for an investment, as a lower price means a higher yield, all else the same. However, there are some academic studies that suggest price appreciation predicts continued price appreciation in the short term. With that in mind, here are two fast-rising TSX stocks that still look like pretty good buys today.
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Brookfield
Brookfield Corp (TSX: BN) is a Canadian financial conglomerate. It is best known as the parent company of Brookfield Asset Management, Canada’s largest asset manager by market cap. The company is also parent to various other operating businesses in fields like renewable energy, infrastructure, and more.
Brookfield is one of the most respected Canadian financial services globally. Having been owned by investors like Bill Ackman, Mohnish Pabrai and Chuck Akre, it has some prestigious backers. The company and its subsidiaries have been very active in deal-making this year, busily working to buy out First National Financial and others.
The last 18 months have been a busy one for Brookfield. In May of 2024, Brookfield Renewable Partners announced a major deal to supply Microsoft with 10.5 gigawatts of clean power, the largest such deal in history. This year, the company repeated the feat, inking a similar deal with Alphabet. Later in the year, Brookfield Corp closed its First National buyout deal.
As the above paragraphs illustrate, Brookfield is a very “well-connected” company, being trusted by some of the wealthiest individuals and companies in the world. That is a major advantage when it comes to raising money. The fact that the company’s CEO Bruce Flatt is widely perceived as charismatic and enthusiastic about his work certainly doesn’t hurt either.
Despite all of the positives about Brookfield listed above, the company’s stock is still cheap by some measures, trading at about 15 times distributable earnings (DE). In the past, it traded at a considerable discount to its sum of the parts (SOTP) value as well. These days, the discount is less than it used to be, with Brookfield having risen 100% in just over a year. Still, BN is probably a decent value for intelligent investors.
TD Bank
The Toronto-Dominion Bank (TSX: TD), better known as TD Bank, is Canada’s second-largest bank. It is known as the “most American of Canadian banks, due to its large presence in the U.S. market. It has been rising rapidly in the markets this year, up 50% year to date, not including dividends.
Why has TD stock been rising so much this year?
It comes down to a few reasons:
- The stock was beaten down to below intrinsic value last year, resulting in a big recovery this year.
- TD Bank executives approved a very large buyback this year.
- The company’s earnings releases have beaten estimates.
The reasons above explain why TD Bank stock rallied this year; the latter two also provide some basis for thinking the stock will keep rallying in the third quarter.
