The market’s volatility over the past several months has provided long-term investors with plenty of excellent buying opportunities. The S&P/TSX Composite Index may be flat on the year, but there have been lots of significantly sized drops over the past half-year.
I’d argue that two of the main catalysts for the market’s recent volatility has been potential interest rate hikes and the uncertainty surrounding the pandemic — both of which, though, will likely only have short-term impacts on the stock market.
If you’re planning to invest only for the next year, I’d be extremely cautious. It’s anybody’s guess as to how the market will fare over the next 12 months. By then, there’s a good chance that at least one interest rate increase will have happened, and hopefully, we’ll have returned to our pre-pandemic lifestyles. Either way, it will be very difficult to predict where the market will be trading in a year’s time.
Now’s the time to invest if you’re willing to hold for the long term
If you’re investing for the long term, meaning five years or longer, there’s no need to worry about the market’s current, fragile condition. In fact, I’d urge long-term investors to take advantage of the market’s volatile condition.
There are plenty of high-quality TSX stocks trading at opportunistic discounts right now. Here are two Canadian stocks that are on the verge of rebounding to all-time highs.
TSX stock #1: Air Canada
Unsurprisingly, Air Canada (TSX:AC) was among the hardest-hit Canadian stocks when the pandemic first arrived in Canada. Shares of Canada’s largest airline dropped 70% in barely over a month in early 2020.
Air Canada has certainly rebounded well from its lows in 2020, but the TSX stock is still trading far below all-time highs. Shares are currently down 50% from pre-pandemic price levels.
It’s only a matter of time before air travel demand returns to where it was prior to the pandemic. Air Canada has an incredibly impressive track record of delivering market-beating gains, and there’s no doubt in my mind that the airline will soon return to outperforming the market.
TSX stock #2: Brookfield Renewable Partners
Renewable energy stocks initially rebounded well from the COVID-19 market crash in 2020. Many of the top companies in the sector ended 2020 trading at all-time highs. But after peaking in early 2021, the entire sector has been trending downwards. It’s perhaps to be expected after seeing renewable energy stocks deliver exceptional returns in 2020.
In the short term, I’d caution investors that are looking to earn gains in the renewable energy sector. But over the long term, renewable energy is one of the areas of the market that I’m most bullish on. I’d recommend all long-term investors own at least one renewable energy stock in their portfolio.
If I had to choose just one renewable energy stock to own, it would be Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP). The nearly $30 billion company has an international presence, offering its global customers a range of different renewable energy solutions.
Shares of the TSX stock are up a market-beating 100% over the past five years. And that’s not even including the company’s 3.5% dividend yield.
But like many other renewable energy stocks, Brookfield Renewable Partners has seen its stock plummet over the past year. Shares are currently down more than 20% since the beginning of 2021.
If you’re bullish on the rise of renewable energy, Brookfield Renewable Partners belongs in your portfolio. And at this price, you’ll want to act quickly.
