3 TSX Stocks on My Watchlist

Some smaller companies continue to pique my interest.

| More on:
analyze data

Image source: Getty Images

As an active investor, I’m always looking for ways to strengthen my portfolio. Over the past couple years, I’ve managed to build a very aggressive portfolio geared towards growth. Now, I’ve reached a point where I should start considering wealth preservation in addition to wealth accumulation. Therefore, I’ve been looking for blue-chip companies that could provide reasonable growth. However, there are some smaller companies that continue to pique my interest. Here are three TSX stocks on my watchlist.

Boring can be beautiful

Warren Buffett is known as one of the best investors of his generation. One of his most well-known mottos is, “Boring can be beautiful.” By that, he means that companies that fall to the background in terms of attention and go about their business year after year can end up being some of the best investments you’ll ever make. When it comes to Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM), that describes the company perfectly. Brookfield isn’t a flashy company, but it seems to get the job done year after year.

Brookfield has a portfolio of approximately $625 billion in assets under management. This makes it one of the largest alternative asset management firms in the world. Not only is its portfolio large, but it’s also diverse. The company holds assets in the real estate, infrastructure, and utility industries. In addition, Brookfield holds a large portfolio consisting of private equities. A leader within the Canadian financial sector, Brookfield has managed to generate an average annual return of 16% since August 1995.

A legend within the Canadian tech sector

There are few stocks on the TSX that have been able to produce the same kind of gains as Constellation Software (TSX:CSU). Since its IPO in May 2006, Constellation Software stock has gained nearly 12,000%. The company attributes its success to its simple business strategy. To put it simply, Constellation looks for good companies and provides the coaching and resources needed in order for the acquired company to become a leader in its industry.

Since being founded, Constellation Software has acquired more than 500 businesses. For most of its history, those acquisitions have been small- and medium-sized vertical market software companies. Earlier this year, Constellation’s president Mark Leonard announced that the company would start targeting large VMS businesses. This is a very interesting decision and could be a vital catalyst for Constellation Software stock moving forward.

Another play on the e-commerce industry

In addition to the two blue-chip companies mentioned earlier, I am considering expanding my exposure to the e-commerce industry. Goodfood Market (TSX:FOOD) is an online grocery and meal kit company. It’s estimated that the company holds a 40-45% share of the Canadian meal kit market. As one of the fastest-growing online grocery companies in Canada, we could see this market share increase in the coming years.

In fiscal year 2017, Goodfood reported $20 million in revenue. As of its Q3 earnings report this year, Goodfood recorded $384 million in revenue over the past 12 months. That shows that the company is growing at an incredible pace. It’s no secret that the COVID-19 pandemic has caused the online retail market to become a much more important part of our everyday lives. Many consumers, including me, have turned to online groceries at some point over the past year. As e-commerce continues to grow, Goodfood should as well.

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 Jed Lloren has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Asset Management Inc. CL.A LV, Constellation Software, and Goodfood Market Corp.

More on Investing

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

2 Utility Stocks That Are Smart Buys for Canadians in November

Are you looking for some of the smart buys to consider in November? These utility stocks offer growth and a…

Read more »

View of high rise corporate buildings in the financial district of Toronto, Canada
Dividend Stocks

Is Power Corporation of Canada Stock a Buy for its 5% Dividend Yield?

Is Power Corporation of Canada (TSX:POW) stock's 5% dividend yield worth it? Discover why this resilient stock could be a…

Read more »

RRSP Canadian Registered Retirement Savings Plan concept
Retirement

Here’s the Average RRSP Balance at Age 34 for Canadians

It's never too early or too late to work on your retirement savings. How do you fare against the average…

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Is OpenText Stock a Buy, Sell, or Hold for 2025?

OpenText stock has fallen in the last few years, but that could mean this top tech stock remains an undervalued…

Read more »

hand stacks coins
Dividend Stocks

Here Are My Top 3 Dividend Stocks to Buy Now

These three dividend stocks are ideal for strengthening your portfolio and earning a stable passive income.

Read more »

man touches brain to show a good idea
Dividend Stocks

3 No-Brainer REIT Stocks to Buy Right Now for Less Than $200

REITs have long been touted as some of the best dividend stocks out there if you want recurring, strong income.…

Read more »

AI microchip
Tech Stocks

Celestica Stock: Buy, Sell, or Hold?

Celestica's stock price has rallied 950% in the last five years. Will the AI boom send it even higher in…

Read more »

Aircraft Mechanic checking jet engine of the airplane
Investing

Is Air Canada Stock a Buy at Its Current Price?   

Air Canada stock has surged 27% in two months. Should you consider buying it at the current level of over…

Read more »