Written by Daniel Da Costa at The Motley Fool Canada
One of the most important qualities that investors need to ensure success is the ability to keep a long-term mindset. While the market and economy will temporarily cycle, over the long term, the best companies will continue to gain value. Therefore, long-term investors who buy the best stocks when they are cheap, as they are now, can set themselves up for years of substantial growth.
It’s important to understand that no matter what the conditions, but especially when the economy is facing headwinds, the short-term is always uncertain and hard to predict.
Therefore, it’s much more important to identify the best businesses and then buy them when they are priced attractively. So if you’re looking to take advantage of the current market environment, here are five of the best stocks to buy now.
A top Canadian financial stock
One of the fastest-growing stocks in Canada over the last few years has been goeasy (TSX:GSY), a specialty finance stock. From 2017 to the end of 2022, its revenue more than doubled, and its normalized earnings per share (EPS) grew from $2.97 to $11.55, a gain of more than 285% in only five years.
So with goeasy trading almost 50% off its all-time high reached back in September 2021, it’s certainly one of the best stocks to buy now.
Not only has it proven that it can grow rapidly in the past, but analysts also expect its revenue to grow by another 20% this year and more than 15% next year.
Furthermore, after selling off significantly in this environment, the stock now trades at a forward price-to-earnings (P/E) ratio of just 7.9 times.
And on top of all the recovery potential it has, as well as its prospects for growth, goeasy also pays a dividend with a current yield of more than 3.4%.
One of the best stocks to buy and hold for decades
Another high-quality stock to consider adding to your portfolio is Dollarama (TSX:DOL), the rapidly growing discount retailer.
Dollarama doesn’t offer the same kind of discount as other stocks on this list. However, it’s trading roughly 10% off its high and is one of the few stocks that can potentially benefit from this economic environment.
Plus, as we’ve seen from Dollarama for years, as it continues to expand its store count, improve its merchandising and scale its costs, it can grow its earnings substantially.
From 2017 to 2022, Dollarama’s normalized EPS increased from $1.24 to $2.18, an increase of more than 75%, showing why it’s one of the best stocks to buy now.
A top Canadian energy stock
With all the concern about the global economy in recent weeks, energy prices and energy stocks like Freehold Royalties (TSX:FRU) have fallen rapidly, creating an excellent opportunity for long-term investors to buy one of the best stocks in the space.
Not only is Freehold now trading almost 20% off its 52-week high, but its dividend yield is now above 7.3%, making it ideal for dividend investors.
And while 7.3% is a significant dividend, Freehold is still expected to have a low payout ratio of 57% of its free cash flow this year.
One of the best growth stocks to buy now
One of the stocks trading at the biggest discounts on the market today is WELL Health Technologies (TSX:WELL). WELL got off to a great start to the year but then sold off as uncertainty and risk have increased over the last few weeks.
Earlier this week, though, WELL once again posted earnings that beat expectations, and its stock has begun to rally again.
Even with WELL’s recent rally, though, it still trades at price-to-sales ratio of 1.6 times, a discount you won’t want to pass up.
A top Canadian retailer
Lastly, Canadian Tire (TSX:CTC.A) is undoubtedly a stock that investors will want to consider while it’s still cheap. The market has been concerned that Canadian Tire could suffer in this economic environment, yet it continues to perform well.
When it reported earnings last month, Canadian Tire smashed expectations with normalized EPS of $9.34 compared to estimates of $7.46.
And with Canadian Tire trading at an atttactive P/E ratio of 9.4 times, it’s certainly among the best stocks to buy now.
Before you consider Canadian Tire, you'll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in March 2023... and Canadian Tire wasn't on the list.
The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 22 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks * Returns as of 3/7/23
Fool contributor Daniel Da Costa has positions in Freehold Royalties, Goeasy, and Well Health Technologies. The Motley Fool recommends Freehold Royalties. The Motley Fool has a disclosure policy.