Written by Adam Othman at The Motley Fool Canada
Are you new to the stock market investing world and looking for a place to start with a small initial investment? If you have as much as $250 of capital you can allocate to begin building a self-directed investment portfolio, you can find plenty of assets that could be excellent long-term investments.
You can take several approaches when searching for beginner stocks. From well-diversified businesses with strong operations to high-growth stocks trading for substantial discounts, the possibilities are endless. In this article, I will briefly discuss three TSX stocks you can keep on your radar when you start your stock market investing journey.
A well-capitalized and diversified company
Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM) is a $106.23 billion market capitalization alternative investment management firm headquartered in Toronto. The company boasts US$725 billion in assets under management (AUM) that it allocates to assets across various industries worldwide.
It could be the perfect beginner stock to gain diversified exposure to different industries in the form of a single asset.
At writing, Brookfield Asset Management stock trades for $64.64 per share and boasts a 1.10% dividend yield. Through its subsidiaries, the company invests in a globally diversified portfolio of real assets in real estate, renewable energy, private equity markets, infrastructure, and more. It could be a good place to begin stock market investing.
A strong Canadian financial institution
Canada’s financial institutions have long had a reputation for being solid long-term investments for almost two centuries, and bank stocks like Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) are the perfect example showing why. The $94.15 billion market capitalization bank is one of Canada’s Big Five banks; it’s the third largest in market capitalization and bank deposits among its peers.
Scotiabank stock is also an interesting investment for dividend-seeking investors. The Canadian bank stock has paid its shareholders their dividends without fail for 189 years, reflecting its financial strength and solid performance over several decades. Scotiabank stock trades for $78.17 per share at writing and boasts a juicy 5.27% dividend yield that it pays each quarter.
A battered and bruised growth stock
Shopify (TSX:SHOP)(NYSE:SHOP) is not a stock many seasoned investors might be keen on investing in right now. The Ottawa-based $66.63 billion market capitalization e-commerce company rose to fame when it went public in 2015.
It quickly rose through the ranks on the TSX amid growing momentum in the e-commerce industry and the broader tech sector, becoming the largest market capitalization Canadian stock in a matter of a few years.
However, it fell out of favour, as the tech sector declined, and the pandemic-induced tailwinds died down. The overvalued stock’s valuation has fallen far from grace. As of this writing, Shopify stock trades for $52.75 per share, down by 76.33% from its 52-week high.
The company offers merchants of all sizes the platform and tools necessary to run online stores. It boasts immense long-term growth potential but has been massively overvalued in recent years.
Despite its performance on the stock market, its revenue has grown at a compound annual growth rate of almost 40% in the last five years. If the stock recovers from the ongoing slump, it could deliver multi-bagger returns in the long run for investors willing to take the risk.
Stock market investing requires making smart choices with your investment capital based on your financial goals. Creating a well-balanced portfolio requires investing in high-quality, blue-chip stocks for stable and steady growth while taking on some risk with high-risk but high-growth potential assets.
These three TSX stocks can be good candidates for you to consider for your self-directed portfolio for these purposes.
Before you consider Brookfield Asset Management, you'll want to hear this.
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Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends BANK OF NOVA SCOTIA and Brookfield Asset Management Inc. CL.A LV.