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Yahoo
19-04-2025
- Business
- Yahoo
A Misunderstood Growth Stock Down 23%: Why I'm Considering goeasy for a $5,000 Investment
Written by Kay Ng at The Motley Fool Canada When a proven growth stock falls over 20% from its highs, many investors get nervous. But I get interested. goeasy (TSX:GSY), a leading Canadian non-prime lender, is currently down 23% from its 52-week high of $206. While many are quick to dismiss it amid recession fears and geopolitical tension — including a new round of U.S. tariff risks — I see this pullback as a compelling buying opportunity. Here's why I'm seriously considering putting $5,000 into this misunderstood financial powerhouse. Volatility isn't new for goeasy. Since its founding in 1990, the company has weathered all kinds of market conditions — and rewarded long-term investors handsomely. In the past decade alone, goeasy has delivered a jaw-dropping 25% annualized return, turning a $1,000 investment into more than $9,400. This level of compounding is no accident. It was driven by earnings-per-share growth of over 27% annually, with returns coming from consistent dividend payments and capital appreciation. While the current correction feels significant, zooming out shows it's more of a blip in an otherwise impressive growth story. At around $158 per share, goeasy trades at a price-to-earnings (P/E) ratio of approximately nine — well below its historical average. That represents a discount of roughly 25%, even as the business continues to grow and generate income. Notably, the current dividend yield is 3.7%, which is substantially higher than its 10-year average of 2.2%. This elevated yield not only boosts income potential but also signals undervaluation. Analysts agree: the average 12-month price target is $235, implying nearly 49% upside from current levels. What really excites me about goeasy isn't just the numbers — but the business model. The company focuses on serving Canada's underserved non-prime borrowers, a segment often ignored by traditional financial institutions like the big banks. It now has over $4 billion in consumer loans on the books and has originated more than $16 billion to date. goeasy operates more than 400 physical locations while maintaining a strong digital presence, creating an effective omnichannel platform. Strategic acquisitions like LendCare have further diversified its offerings into point-of-sale financing in industries such as automotive and healthcare. Perhaps most impressively, about 60% of its customers see improvements in their credit scores, showing the company's focus on financial empowerment — not just profit. This creates brand loyalty and long-term repeat business, helping cement goeasy's position in the Canadian lending landscape. Even if goeasy's earnings growth slows to 15% annually (which is still good growth) over the next five years and its P/E multiple only modestly expands to 10.5, investors could still see annual returns of around 20%. That would be enough to double your money in under four years. So yes, the stock is down. But from where I'm standing, this is exactly the kind of misunderstood growth story I want to be part of. And that's why goeasy is firmly on my radar for a $5,000 investment. If investors are worried about a recession looming but are confident in the business, they can split their investment and average into a full position over time. The post A Misunderstood Growth Stock Down 23%: Why I'm Considering goeasy for a $5,000 Investment appeared first on The Motley Fool Canada. Before you buy stock in goeasy, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and goeasy wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $20,697.16!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*. See the Top Stocks * Returns as of 3/20/25 More reading Best Canadian Stocks to Buy in 2025 Market Volatility Toolkit 4 Secrets of TFSA Millionaires Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Kay Ng has positions in goeasy. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. 2025
Yahoo
22-03-2025
- Business
- Yahoo
Market Volatility? A Canadian Investor's Guide to Turning Uncertainty Into Profit
Written by Kay Ng at The Motley Fool Canada Market volatility is an inevitable part of investing. Whether driven by economic shifts, geopolitical tensions, or other uncertainties, it can be unsettling for investors. Recently, the U.S.-Canada trade tensions and other global events have heightened volatility, leaving many wondering how to navigate these unpredictable waters. For Canadian investors, market volatility presents an opportunity to turn uncertainty into profit — if approached with the right strategy. Here's how to leverage market swings to your advantage. One of the best ways to capitalize on market volatility is to identify businesses that are less sensitive to the factors driving the uncertainty. Solid companies with strong fundamentals are often the most well-positioned to weather the storm. Rather than trying to time the market, investors can look for opportunities to buy partial positions in high-quality companies when the stock price dips. Take CGI Inc. (TSX:GIB.A), for example. As one of Canada's largest IT and business consulting firms, CGI offers a diversified and stable revenue stream, supported by long-term contracts with government and corporate clients. The company's strong cash flow, paired with its ability to grow through strategic acquisitions and organic expansion, makes it a prime candidate for long-term investors. With about 12 consecutive years of dividend increases and a solid 7.6% dividend growth rate over the last decade, CGI offers both capital appreciation and growing income generation – traits that are crucial in volatile markets. Market pullbacks often create opportunities to purchase quality stocks at discounted prices. For example, CGI stock recently declined by 19% from its 52-week high, but it has still delivered an average annual return of about 10% over the last decade, outperforming the Canadian stock market's 8.8% return during that period. When buying during these dips, investors have the chance to lock in attractive valuations. At $141.32 per share at the time of writing, CGI is trading at a blended price-to-earnings (P/E) ratio of about 17.7. This is a reasonable valuation compared to its historical levels, and analysts believe the stock is trading at a 21% discount, with nearly 27% near-term upside potential. In fact, history shows that market corrections can bring high-quality stocks like CGI to more compelling valuations. During the 2020 market crash, CGI's stock fell by approximately 38%, but its earnings only dipped slightly — demonstrating its resilience even in the toughest of times. While individual stock picking can offer great rewards, it's important for investors to maintain a diversified portfolio to manage risk. This includes a mix of stocks, bonds, and other asset classes. A diversified portfolio, populated with solid businesses across various industries and sectors, is better equipped to withstand the shake-ups that come with market volatility. Moreover, sectors tend to perform differently at various times, so diversification ensures that even if one industry is hit hard, other sectors can help balance the portfolio's performance. By maintaining exposure to a range of high-quality companies across different industries, you can reduce the overall risk in your portfolio while taking advantage of opportunities when markets correct. Volatile markets are not a reason to panic but an opportunity to build wealth over the long term. By focusing on resilient companies like CGI, capitalizing on dips, and maintaining a diversified portfolio, Canadian investors can turn market uncertainty into profit. The key is patience, strategy, and the ability to identify quality businesses that can thrive in the long run. The post Market Volatility? A Canadian Investor's Guide to Turning Uncertainty Into Profit appeared first on The Motley Fool Canada. Before you buy stock in CGI Group, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and CGI Group wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $20,697.16!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*. See the Top Stocks * Returns as of 3/20/25 More reading Best Canadian Stocks to Buy in 2025 Here's Exactly How $15,000 in a TFSA Could Grow Into $200,000 4 Secrets of TFSA Millionaires Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Kay Ng has no position in any of the stocks mentioned. The Motley Fool recommends CGI. The Motley Fool has a disclosure policy. 2025
Yahoo
06-02-2025
- Business
- Yahoo
Where to Invest Your $7,000 TFSA Contribution for Long-Term Gains
Written by Kay Ng at The Motley Fool Canada With the Tax-Free Savings Account (TFSA) contribution limit for 2025 set at $7,000, Canadians have a fantastic opportunity to invest for long-term growth without paying taxes on the gains. But with a range of eligible investments — from cash and Guaranteed Investment Certificates (GICs) to stocks, mutual funds, and exchange-traded funds (ETFs) — where should you place your contribution for the best results? The answer lies in strategically choosing investments that offer strong potential for long-term returns while fitting your risk profile. One of the easiest and most efficient ways to grow your TFSA is by investing in ETFs, which offer instant diversification. A great example of a low-cost, diversified ETF is iShares Core Equity ETF Portfolio (TSX:XEQT). This fund provides 100% equity exposure across global markets, with approximately 45% in U.S. stocks, 25% in Europe, Asia, and Australia, and another 25% in Canadian stocks. The remaining 5% is invested in emerging markets. In the last five years, XEQT has posted an impressive annual return of about 11.6%, making it an excellent choice for long-term investors, especially on any pullbacks. The ETF also has a low management expense ratio (MER) of 0.20%, ensuring more of your money stays invested. Plus, with a recent quarterly cash distribution yielding 3.16%, you get a nice stream of passive income alongside growth. Artificial intelligence (AI) is one of the most exciting sectors for long-term growth, though it comes with higher volatility. If you're not keen on picking individual AI stocks but still want to tap into this rapidly growing area, consider an AI-focused ETF like CI Global Artificial Intelligence ETF (TSX:CIAI). This actively managed ETF is helmed by a team of experts and holds high-quality companies in the AI space, including top names like NVIDIA, Broadcom, and Microsoft. Launched in May 2024, the ETF has already returned around 33% since its inception, highlighting the immense growth potential of AI-focused investments. With a MER of 0.42%, it's a more efficient way to gain exposure to the AI revolution without having to worry about picking individual stocks. However, keep in mind that the volatility of the tech sector can lead to more significant price fluctuations, so this is better suited for investors with a higher risk tolerance. If you prefer investments that provide both growth and income, dividend stocks might be a good fit. Many established companies pay a steady stream of dividends to shareholders, which can be reinvested for compounded growth. A strong candidate for dividend income is Bank of Nova Scotia (TSX:BNS), which offers a solid yield of around 5.9%. While its stock has lagged behind some of its peers, it remains a reliable dividend payer with a sustainable payout ratio of 60% of adjusted earnings. Analysts believe Bank of Nova Scotia shares are undervalued by approximately 11%, which presents an opportunity for both capital appreciation and consistent dividend income. With the potential to deliver total returns of about 10% per year over the next three years, this stock is a solid choice for investors seeking a blend of income and growth. While there are many options for your TFSA contribution, ETFs, AI-focused funds, and dividend stocks are good considerations for long-term gains. Before making a decision, it's essential to assess your risk tolerance and investment horizon. Whether you opt for diversified ETFs, take advantage of the explosive growth in AI, or focus on steady dividend income, your $7,000 TFSA contribution can be a powerful tool for building wealth over time. The post Where to Invest Your $7,000 TFSA Contribution for Long-Term Gains appeared first on The Motley Fool Canada. Before you buy stock in Bank of Nova Scotia, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Bank of Nova Scotia wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $18,750.10!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 35 percentage points since 2013*. See the Top Stocks * Returns as of 1/22/25 More reading 10 Stocks Every Canadian Should Own in 2024 [PREMIUM PICKS] It's Time to Buy: 1 Canadian Stock That Hasn't Been This Cheap in Years Where to Invest Your $7,000 TFSA Contribution 3 No-Brainer TSX Stocks to Buy With $300 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Kay Ng has positions in Bank Of Nova Scotia and Microsoft. The Motley Fool recommends Bank Of Nova Scotia, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. 2025 Sign in to access your portfolio
