3 Top Sweet Spot Stocks in the TSX Index

This trio of mid-cap stocks, including Cameco (TSX:CCO)(NYSE:CCJ), could provide the risk/reward balance you need now.

| More on:

Hey there, Fools! I’m back again to highlight three attractive mid-cap stocks. As a quick reminder, I do this because high-quality mid-cap stocks have the ability to grow much faster than stodgy old large-cap companies, and are also far less risky than speculative and volatile small-cap stocks.

Mid-cap stocks strike the perfect balance of reward and risk. In other words, they hit the “sweet spot” when it comes to size.

So, without further ado, here are three stocks I like with market caps of between $2 billion and $10 billion.

Under the boardwalk

Leading off this week is Boardwalk Real Estate Investment Trust (TSX:BEI-UN), which currently sports a market cap of $2.5 billion. Over the past year, shares of the residential REIT are up 21% versus a gain of 6% for the S&P/TSX Capped REIT Index.

With over 33,000 units in four provinces, Boardwalk is one of Canada’s largest multi-family residential real estate operators. During the first six months of 2018, the company generated $55 million in funds from operations — a key metric in real estate — on rental revenue of $215 million.

With a dividend yield of 2.1% and beta of 0.2, you’d be hard pressed to find a more comforting mid-cap play than Boardwalk.

Make a U-turn

Next up, we have Cameco Corporation (TSX:CCO)(NYSE:CCJ), which has a market cap of $6.3 billion. Year-to-date, shares of the uranium producer are up an impressive 38% versus a loss of 13% for the S&P/TSX Capped Materials Index.

A favorable tax ruling last month fueled a nice quick pop in the stock, but there’s good reason to bet on the long term. In its recently released Q3, Cameco earned $28 million, versus a loss in the year-ago period, on revenue of $488 million. While management remains cautious on uranium prices, they see steady growth in demand going forward — 55 reactors are currently under construction.

Right now, the stock sports a reasonable EV/EBITDA multiple of 11, along with a soothing three-year beta of 0.1.

Finding pennies

Rounding things out this week is Ivanhoe Mines (TSX:IVN), which currently has a market cap of $2.6 billion. Year-to-date, shares of the mining company are down 39% versus a loss of 5% for the S&P/TSX Composite Index.

Ivanhoe operates mainly in the Democratic Republic of Congo (DRC), so political risks have weighed heavily on the stock. But if you’re willing to take on some uncertainty, the upside might be worth it. Early last month, Ivanhoe announced a major new discovery of high-grade copper on its 100%-owned Western Foreland asset in the DRC — its third significant find in the country.

While extremely volatile — the stock has a beta of 3.5 — Ivanhoe is a potent way to play the still-positive long-term outlook for copper.

The bottom line

There you have it, Fools: three attractive mid-cap stocks to help boost your wealth.

As is always the case, don’t view them as formal recommendations. They’re simply ideas to research further. Even the most solid mid-cap stocks can plunge on bad news, so homework is always required.

Fool on.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Brian Pacampara owns no position in any of the companies mentioned.

More on Investing

A data center engineer works on a laptop at a server farm.
Tech Stocks

3 No-Brainer Data Centre Stocks to Buy With $500 Right Now

Data centres are going to be a huge growth opportunity in the next decade. And these are the top buys.

Read more »

Paper Canadian currency of various denominations
Bank Stocks

1 Magnificent Canadian Dividend Stock Down 28% to Buy and Hold for Decades

This top Canadian dividend stock is underperforming its large peers this year, but a turnaround could be on the horizon.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Where to Invest Your $7,000 TFSA Contribution

The TFSA is attractive for investors who want to generate tax-free passive income.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

TFSA Investors: 3 Dividend Stocks Worth Holding Forever

These TSX stocks have the potential to grow their dividends over the next decade, making them top investments for TFSA…

Read more »

hand stacks coins
Investing

Secure a Wealthy Future With These 3 Canadian Stocks

These Canadian stocks have the potential to appreciate substantially over time and may also enhance returns through dividend payments.

Read more »

Tractor spraying a field of wheat
Dividend Stocks

Is Nutrien Stock a Buy for its Dividend Yield?

Nutrien is down more than 50% form the 2022 highs. Is NTR stock now oversold?

Read more »

analyze data
Investing

3 Blue-Chip Stocks Every Canadian Should Own

These blue-chip stocks are backed by large-cap companies with well-established businesses, solid fundamentals, and a growing earnings base.

Read more »

dividends grow over time
Stocks for Beginners

The Smartest Growth Stock to Buy With $2,000 Right Now

Do you have $2,000 to invest for the long term? These three TSX stocks have and will continue to deliver…

Read more »