Yahoo Finance Calling All Brave TFSA investors: 2 Stocks to Buy in a Steep Selloff
Written by Karen Thomas, MSc, CFA at The Motley Fool Canada
When markets sell off, dread and fear usually take hold — sometimes even panic. While these feelings are understandable, calm investors can make good, rationale decisions. Are you a brave TFSA investor?
Here are two stocks for you to buy in a steep selloff.
Fortis: An ideal TFSA stock to buy in a downturn
Fortis (TSX:FTS) is a $27 billion utility with a diverse geographic footprint and asset mix. In recent years, Fortis has historically been a stable grower, despite all of the macro economic problems that are present at any given time. This means that Fortis is a defensive holding — one that we can rely on no matter what.
But it doesn’t mean that Fortis’s stock price won’t ever get hit. Let’s take March 2020 as an example. When the pandemic first hit, there was a lot of panic in the market. Thus, Fortis’s stock price sunk to a low of $42.20 during that month — more than 28% lower than the prior month’s highs. While the fear and panic were understandable, if we’d bought the stock at that time, we would have been very happy TFSA investors.
Today, Fortis stock is trading at $55.60. While this is much higher than 2020 lows, it’s also much lower than the highs that the stock hit in 2022. This is because the market is facing many risks in 2023. For example, rising interest rates and inflation are causing havoc.
But Fortis is not an economically sensitive company. In fact, it’s the opposite. The demand for power and electricity are highly insensitive to the economic outlook. We simply need power no matter what. Also, Fortis is financially strong and its business sustains a long-term, steadily growing profile. This is illustrated in the fact that this year marked Fortis’s 49th consecutive year of dividend growth. The latest dividend increase was a 5.6% increase last year, and the company expects dividend growth in the range of +4% to +6% until 2027.
So, Fortis’s staying power and tax-free dividend income make Fortis stock a great addition to your TFSA.
Well Health Technologies stock: On a long growth trajectory
As an omni-channel digital health company, Well Health Technologies (TSX:WELL) is changing healthcare as we know it. It offers digital healthcare solutions for medical clinics and health practitioners globally. It’s also Canada’s largest outpatient medical clinic owner/operator and leading telehealth service provider.
These digital solutions have been long overdue, and there’s nothing that will stop them. Essentially, technology has been sorely absent in the healthcare space. Now that all can see and feel the difference it makes, there’s no stopping this. This makes it a great stock for TFSA investors. The potential for tax-free capital gains is significant.
Last quarter, the company reported a 47% increase in revenue to $145.8 million — a record. This was driven by acquisitions and an 18% organic growth rate. Strong patient engagement hit a record, and virtual services soared 191%. All of this led to management raising guidance for the fourth consecutive quarter.
While Well Health Technologies stock is certainly riskier than Fortis, it’s still one that I believe that TFSA investors should buy in a market selloff. Because although it’s riskier due to the fact that it’s an emerging company, the space it’s in (healthcare) is very defensive. And today, the Canadian healthcare system is experiencing strong demand, as the population continues to grow and age. As a result, we sit here today with a healthcare system that’s overwrought with surgical backlogs, unsustainable wait times, and diagnostic issues.
Well Health Technologies stock is benefiting and will continue to benefit from this, and as the healthcare system moves into the new age, more benefits will emerge, such as information databases that will enable precision medicine. This means customizing healthcare decisions, treatments, practices, and products to suit individual patient needs.
Motley Fool: The bottom line
In closing, TFSA investors and all investors should prepare for the selloff. Stay calm and act, even in the face of fear. In the long run, choosing the right stocks to buy in markets selloffs often results in the best buys ever!
The post Calling All Brave TFSA investors: 2 Stocks to Buy in a Steep Selloff appeared first on The Motley Fool Canada.
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Fool contributor Karen Thomas has a position in Well Health Technologies. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.
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