When the markets are uncertain, only the strongest stocks will do. That’s why we have selected two of the strongest stocks currently traded on the TSX. The following title choices are based on three main criteria. To make the reduction, these two companies had to be well established, profitable and undervalued. With a market capitalization of over $ 1 billion each, both names are offered at reasonable prices based on cash flow.
The choice of solid gold stocks
Barrick Gold (TSX: ABX) (NYSE: GOLD) is sort of a one-stop-shop stock to access the yellow metal. Warren Buffett may have turned around, but the buying thesis remains strong. As an explorer, developer, producer and retailer, Barrick is involved in every step of the gold mining process. It also brings exposure to copper. This little-known fact makes Barrick a de facto low exposure coin for a range of growing industries.
To the classic low-risk game of a precious metals share, investors can therefore add the potential for strategic capital gain. From renewable energies to access to electric vehicles, exposure to copper brings growth potential to a commodity portfolio. These advantages also come at a fairly competitive price. Sold at $ 30 a share, however, Barrick has lost 20% since the end of the summer. In short, this stock is a good deal right now.
The Big Five banking title
Canadian Imperial Bank of Commerce (TSX: CM) (NYSE: CM) comes at the shallower end of the Big Five in terms of market capitalization. CIBC is nonetheless a leading, diversified and world-leading financial company, providing access to a range of services and products. In this capacity, he adds strategic advantages to the financial services segment of a TSX equity portfolio. These include exposure to institutional and public banks. And, of course, CIBC also counts business and business clients as clients.
Year over year, CIBC has experienced only moderate share price growth. However, while the value could also be slightly better, this is a very healthy stock with a low debt-to-equity ratio. A 5.2% dividend yield is still one of the richest among Bay Street financiers. A payout ratio of 72% also assures shareholders that its payout is secure. This hedge also offers long-term investors some potential for dividend growth.
The AP / B ratio of 1.3 times the pound is pretty standard for a major Canadian bank. These names are a bit expensive, largely because they are of very high quality. Predictability is however a commodity in itself in these uncertain times. Indeed, with a 36-month beta of 0.9, CIBC has slightly lower volatility than the market. This should be important for investors with low risk thresholds in their dividend-paying equity portfolios.
In short, Warren Buffett may have done gold investors a favor by turning Barrick around. Indeed, a general decline in gold will only offer greater value opportunities for this essential commodity. A Barrick dividend yield of 1.5% remains rich. And gold’s safe haven status is, as always, unassailable. Add the security of a Big Five banker and a pair of Barrick-CIBC stocks could add years of passive income and stability to a low-risk TSX stock portfolio.
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