While a recession can be a scary time to look at your investments, it’s also the perfect time to reconsider what you have in your portfolio. As part of diversifying, you want to make sure there are a number of long-term stocks nestled in there that can produce returns for decades.
Stocks that offer a history of strong performance, dividends that have consistently increased over the years, and promising future growth are broadly what you should be looking for when considering long-term stocks. And with a recession coming soon, some of these long-term stocks are offering up deals you might not get for another decade.
Back in May, many Fool writers wrote that the Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) was a bargain. Granted, CIBC is also Canada’s most Canadian bank, so when a recession hits this stock will likely dip further and be down longer than some of the other more geographically diversified banking stocks. However, that also means this stock has been a huge bargain, dropping 12.5% between May and August.
Today, the share price is almost back where it was before the dip, and that’s because CIBC has been changing its tune. The company produced some better earnings, and now investors are picking up this stock in bulk. Investors looking for a bargain can still get in on the stock, and see strong near-term returns as well as huge gains as a long-term investment.
While CIBC had a poor earnings report that sent shares lower, the same cannot be said about Suncor Energy Inc. (TSX:SU)(NYSE:SU). Suncor has been unnecessarily beaten down over the past year as a result of the glut in the oil and gas industry, but investors seem to forget that this is a fully integrated business. That means when one area of the business is down, there are plenty of other ways the company can pick up the slack.
This is exactly what’s been happening lately, with the company’s downstream business bringing in a lot of revenue, according to the last quarterly report, and Suncor taking the opportunity of low prices within the industry to do some reinvestment and build up recent acquisitions while it’s cheap to do so. Bottom line: Suncor is a strong business with long-term contracts that should see this stock double in share price within the next year.
If you’re looking for another serious bargain, consider Enbridge Inc. (TSX:ENB)(NYSE:ENB) as the best place to start. The company has started on the rebound but is still well below its fair value of around $60 per share. That’s again due to the oil and gas industry, but also short-term issues the company has faced in the last few months.
However, for long-term investors, Enbridge is a goldmine waiting to be exploited. The company’s long-term contracts continue to bring in cash, which has supported growth projects due to be completed by 2021, with further projects after that. And while the company is in the oil and gas industry, it’s the part of the business that energy companies need right now: pipelines. When all is said and done, Enbridge should see a massive increase in revenue, which should be reflected in its share price.
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Fool contributor Amy Legate-Wolfe owns shares of ENBRIDGE INC. The Motley Fool owns shares of Enbridge. Enbridge is a recommendation of Stock Advisor Canada.
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