2 Top TSX Stocks Under $40 to Buy in This Current Environment

Here are two of my top picks I think investors would be remiss not to consider at these levels today.

| More on:

Investor sentiment has changed massively following the economic contraction coming out of the pandemic. Defensive stocks initially soared, as investors priced in higher risks. However, today, investors are increasingly betting highly on cyclical recovery. For believers in this cyclical recovery, here are two top stocks under $40 to consider today.

Curaleaf

The cannabis sector is one investors looking for highly cyclical picks have looked to for some time. Indeed, in terms of growth, this sector is one of the best out there today.

Cannabis consumption continues to increase at a rapid pace, and investors are getting excited about stocks across the sector today. However, U.S. legalization is a newfound catalyst that could take this sector much higher in the years to come.

If the Biden administration does move forward with the federal legalization of cannabis for recreational use, the U.S. will become the largest legal market. Accordingly, one of my top picks in this sector remains Curaleaf Holdings (TSXV:CURA).

Why?

Well, Curaleaf is one of the few publicly listed cannabis companies with coast-to-coast U.S. exposure. The company’s vertically integrated business model has made it extremely popular among growth investors. With exposure to cultivation, processing, and retail, it promises long-term capital appreciation prospects via expansion and acquisitions. Q4 2020 saw this firm generate revenue worth $230 million — an impressive 205% growth rate year over year.

Indeed, a lot of hype surrounding this stock is speculative. However, I think Curaleaf has intriguing long-term growth prospects for investors in the cannabis space today.

SmartCentres REIT

SmartCentres REIT (TSX:SRU.UN) is probably the last stock that pops into our minds when thinking of passive-income reopening plays. Yes, I know that retail REITs are not attractive amid a pandemic. However, I think this firm is seriously misunderstood and is a fantastic reopening play that investors need to take note of.

SmartCentres maintains an impressive portfolio of income-producing properties amounting to over $10 billion in assets.

It is mostly involved in the retail space, which may turn off some investors, given its notable underperformance amid lockdowns. However, I am tremendously confident in the tenant base of SmartCentres. For example, its major tenant Walmart provides it the much-required moat in the current situation.

Despite reduced foot traffic in what was a disastrous year, Walmart demonstrated its strength in the retail sector. By fulfilling customer orders for essentials across its 11,000 global locations, Walmart largely warded off the brunt of the COVID pandemic. Combine that with this retail REIT’s 97% occupancy rate and 7% yield, and investors are picking a winner with SmartCentres REIT.

Outside retail, this REIT is also involved in developing and maintaining residential and commercial properties. If you are looking for a pick under $40 to add diversification to your portfolio, SmartCentres might be worth further investigation.

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.

Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Smart REIT.

More on Dividend Stocks

Canadian Dollars bills
Dividend Stocks

3 Monthly-Paying Dividend Stocks to Boost Your Passive Income

Given their healthy cash flows and high yields, these three monthly-paying dividend stocks could boost your passive income.

Read more »

Make a choice, path to success, sign
Dividend Stocks

The TFSA Blueprint to Generate $3,695.48 in Yearly Passive Income

The blueprint to generate yearly passive income in a TFSA is to maximize the contribution limits.

Read more »

hand stacks coins
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for a Decade

These three high-yield dividend stocks still have some work to do, but each are in steady areas that are only…

Read more »

senior man and woman stretch their legs on yoga mats outside
Dividend Stocks

TFSA: 2 Canadian Stocks to Buy and Hold Forever

Here are 2 TFSA-worthy Canadian stocks. Which one is a good buy for your TFSA today?

Read more »

calculate and analyze stock
Dividend Stocks

This 5.5% Dividend Stock Pays Cash Every Single Month!

This REIT may offer monthly dividends, but don't forget about the potential returns in the growth industry its involved with.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

How to Use Your TFSA to Earn up to $6,000 Per Year in Tax-Free Passive Income

A high return doesn't mean you have to make a high investment -- or a risky one -- especially with…

Read more »

path road success business
Dividend Stocks

2 High-Yield Dividend Stocks to Buy Hand Over Fist and 1 to Avoid

High yields are great and all, but only if returns come with them. And while two of these might, another…

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

This 7% Dividend Stock Pays Cash Every Month

A high dividend yield isn't everything. But when it pays out each month and offers this stability, it's worth considering!

Read more »