A Bull Market Is Coming, So Here’s What I’m Buying to Get Ahead

Toronto-Dominion Bank (TSX:TD) is just one of several stocks I’m buying ahead of the next bull market.

| More on:

A bull market in stocks is looking increasingly likely in 2023. The S&P 500 (the world’s most followed stock index) has already risen 15.56% from its 2022 lows. If it reaches a 20% gain, then we will be in a confirmed bull market.

It’s too early to say for sure that we will enter a bull market, but some signs look encouraging. Inflation is easing off. People are still getting hired. The March banking crisis appears to be over. These positive signs could signal a big move in the stock market.

In this article, I will explore three stocks that I have been buying to prepare for a future bull market.

TD Bank

Toronto-Dominion Bank (TSX:TD) is a bank stock that I have been buying for many years and have made good returns on. I first started buying it all the way back in 2018. I bought some more in the March 2020 stock market crash and some more again in 2022. At this point, it’s the single biggest holding in my portfolio.

Why do I like TD Bank stock so much? It comes down to a few different factors.

First, it’s relatively cheap, trading at 9.5 times earnings and 1.3 times book value.

Second, it is growing, having increased its revenue by 7% and its earnings by 8.4% per year for the last five years.

Third and finally, it has some catalysts on the horizon, such as potentially closing the First Horizon deal, which would add about $1 billion a year to TD’s net income.

Unlike many banks, TD has a great liquidity position, with more than enough cash and liquid investments to cover potential withdrawals. So, it’s a pretty good bank at the moment.

Bank of America

Bank of America (NYSE:BAC) is another bank stock I’ve been buying ahead of the next bull market. It’s even cheaper than TD Bank, trading at about the same earnings multiple while also being slightly below book value.

Bank of America has enjoyed solid growth and profitability in its recent quarters. In its most recent quarter, it delivered $0.84 in diluted earnings per share, up 15%, and $26.3 billion in revenue, up 13%. That’s pretty strong growth for a financial services company in 2023.

This year, many banks have outright collapsed due to bank runs and unrealized losses on treasury securities. Some smaller banks got hit with a save of withdrawals and because their treasury investments declined in value, they couldn’t afford to pay their depositors off. Bank of America not only survived but actually thrived in this environment.

Taiwan Semiconductor

Taiwan Semiconductor Manufacturing (NYSE:TSM) is another stock I’ve been buying ahead of the next bull market. It’s a Taiwanese company that — as the name implies — manufactures semiconductors (i.e., computer chips.

Many semiconductor companies are seeing their earnings decline this year, as they’re dealing with a loss of demand for their products. In its most recent quarter, TSM delivered small, positive growth in revenue and earnings. Its earnings did go down in U.S. dollar terms, but not by nearly as much as what was seen in other semiconductor companies in the same period.

Overall, TSM is a best-in-class semiconductor stock.

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.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Fool contributor Andrew Button has positions in Toronto-Dominion Bank, Bank of America and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Bank of America and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

More on Investing

Canadian dollars are printed
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Toronto-Dominion Bank (TSX:TD) stock could do well in the year ahead.

Read more »

monthly desk calendar
Dividend Stocks

Monthly Income: Top Dividend Stocks to Buy in November

Here are two of the best monthly dividend stocks in Canada you can buy in November 2024 and hold for…

Read more »

hand stacks coins
Investing

A Top TSX Stock to Buy Now for Real Wealth Later

Intact Financial (TSX:IFC) stock is a fantastic dividend-growth play for the next 15 years and beyond.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Thursday, November 14

The U.S. wholesale inflation data and Fed chair Jerome Powell’s remarks about the economy will remain on TSX investors’ radar…

Read more »

Man data analyze
Tech Stocks

3 Reasons Celestica Stock Is a Screaming Buy Now

These three reasons make Celestica stock a screaming buy for long-term investors.

Read more »

profit rises over time
Dividend Stocks

These 2 Dow Stocks Are Set to Soar in 2025 and Beyond

Two Dow Jones stocks are screaming buys but Canadians must hold them in an RRSP or RRIF to avoid paying…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Use Your TFSA to Earn Ultimate Passive Income

If you have a TFSA, then you have the key to creating ultimate passive income. All you need is a…

Read more »

Confused person shrugging
Dividend Stocks

Better Buy: Fortis Stock or Hydro One Stock?

Let's do a compare and contrast of these two top utilities stocks right now, shall we?

Read more »