TFSA (Tax-Free Savings Account) investors shouldn’t wait for the broader stock markets to correct before getting started as some pretty interesting deals exist today. As we head into the spring season, investors may wish to consider giving some of the more value-rich plays attention as the red-hot tech sector looks to get a bit wobblier. Undoubtedly, the turbulent Tuesday of trade saw quite a bit of wobbliness from the technology sector, with the Nasdaq 100 bringing the mood down on the day.
Just because volatility has picked up again doesn’t mean you should wait for things to settle. It’s times like these when investors fear a correction that tend to be great times to put some new TFSA cash to work. While I wouldn’t chase some of the high flyers on the recent dip, I do think the names dragged down by broader market volatility are worth checking in on.
In this piece, we’ll look at two stock picks that I view as potentially great buys for the month of March.
Bank of Montreal
Bank of Montreal (TSX:BMO) finished 2023 with a bang, recovering a good amount of the ground lost through the turbulent year. Since entering 2024, BMO stock has been quite the drag again, shedding close to 5% of its value year to date.
Indeed, the recent earnings results helped contribute to the latest “half correction.” Undoubtedly, capital markets appeared quite sluggish, as provisions for credit losses weighed heavily. Undoubtedly, provisions were to be expected as the Canadian economy isn’t exactly in a great spot right here.
Though it can be discouraging to buy a bank stock on the back of a weak quarterly number, I do think there were some overlooked bright spots that investors can get behind. Notably, BMO seems to be erring on the side of caution, projecting a bit more pain on the credit front.
In any case, the stock goes for 17 times trailing price-to-earnings (P/E) with a 4.91% dividend yield. A rough first quarter showing for BMO, but that’s no reason to write off the rest of the year, at least in my opinion. You’re getting a quality blue-chip bank with a strong management team and a yield that’s very generous.
Canadian Apartment Properties REIT
Up next, we have Canadian Apartment Properties REIT (TSX:CAR.UN) – CAPREIT for short – a high-calibre REIT with a modest 3.01% dividend yield at writing. As a growth REIT with rental properties in the red-hot Toronto and Vancouver regions (two of the hottest rental markets in the country), CAPREIT stands out as one of the prime residential REIT plays for income investors looking for steady distribution growth and a good amount of capital gains potential over time.
In many ways, shares of CAPREIT exhibit qualities that are more like a stock than a REIT. That’s the beauty of a growth-centric REIT. As rates begin to peak and retreat, I’d look for CAPREIT shares to kick off another bull run, one that may take it back to the highs it saw all the way back in mid-2021. Even if rates stay a tad higher for longer, count on CAPREIT to keep making the right moves to improve its property portfolio with new projects in the pipeline.
