1 Growth Stock to Buy and Hold During Any Market Correction
Written by Amy Legate-Wolfe at The Motley Fool Canada
The TSX today continues to be a place filled with volatility. The TSX is down 11% year to date and well into market correction territory, down 15% since the highs of 2022. So, I could see why you aren’t looking for a great growth stock.
And to be honest, more of a correction could be coming. Inflation data showed Canadians were still spending, with inflation up 7.7% year over year. That means they still haven’t felt enough of a sting to make them pull back their spending.
Therefore, interest rates are still likely to rise, and inflation likely to climb, all until there is a potential market crash or recession. While it could be a soft one, we may not be seeing a sustained rebound for some time. This is why you want a growth stock that can weather this horrid storm.
Seek out commodities
Commodities are items bought and traded on the market that consumers always need. This would include oil and gas but also products that are mined, for example. Some of the longest holds by Warren Buffett have been in this space; he’s sought out commodities that consumers will need even during a recession.
These items would include coal-making steel, copper for electrical equipment and pipes, and silver for electrical contacts and batteries. All of these items have a multitude of purposes that won’t disappear, even during a recession. That is what makes them perfect investments for those wanting to have a growth stock through a recession and beyond.
My top recommendation
If you want a growth stock that will keep on growing, I would consider Teck Resources (TSX:TECK.B)(NYSE:TECK). Teck stock develops and produces all of these commodities and more. Furthermore, it holds projects around the world from Australia to Ireland, Turkey to Mexico, and, of course, Canada to the United States. This gives you a diverse, global portfolio, which is necessary right now as well.
Further, it’s not just into metals but also minerals. It continues to develop products like zinc, chemicals, and fertilizers — products needed to continue creating arable land. And with a 109-year history, you can tell this company isn’t going anywhere anytime soon.
Teck stock is a growth stock, even during today’s poor market. Shares are up 14% year to date, though they’re down 28% from 52-week highs. Yet this offers you a strong buying opportunity for the growth stock.
Strong growth and not just from shares
During its latest earnings report, Teck stock reported a record $1.6 billion, or $3.02 per share, in adjusted profit. Its adjusted EBITDA hit a quarterly record of $3 billion, more than three times the year before. The growth stock saw its copper business increase 23% in profit from the year before, with zinc up a whopping 98%. Coal prices for steel-making drove a $1.6 billion profit as well. And this is all while the company continues to face inflationary pressures.
Teck stock also announced during earnings a buyback program of $500 million. This is on top of the dividends it’s given back to shareholders, with a dividend currently at 1.13%. It’s not enormous, but it’s steady. In fact, it’s even grown during all this turmoil over the last five years.
Shares have also continued to grow — up 500% during the last two decades. That’s through the Great Recession and multiple market corrections. And yet it still remains in value territory. It currently trades at 5.46 times earnings with a 0.39 debt-to-equity ratio.
There was an initial jump for Teck stock with the market correction underway, but shares have fallen back to value levels. I would recommend this growth stock for anyone wanting stable income that will last decades and passive income to boot.
The post 1 Growth Stock to Buy and Hold During Any Market Correction appeared first on The Motley Fool Canada.
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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.