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If I Could Only Buy and Hold a Single Stock, This Would Be it

Alex Smith

Alex Smith

21 hours ago

5 min read 👁 2 views
If I Could Only Buy and Hold a Single Stock, This Would Be it

What stock would you hold if you could hold only one?

It’s a question worth asking yourself — not that you actually should hold only one stock, but because the answer to the question tells you things about how much of your money you should have invested in your top stock.

Generally speaking, you should weigh your best stock ideas — the ones you know the most about and which are the least risky — more heavily than others. That’s not to say that you should hold a single stock portfolio. Your knowledge about any one company is rarely 100%. But the more you know and the better your findings, the more money you should put into a stock. With that in mind, here is the one stock I’d buy and hold if I could buy and hold only one.

Brookfield

Brookfield Corp (TSX:BN) is the biggest Canadian stock holding in my portfolio. It gained that distinction after I made some buys this year when it fell — previously, TD Bank was the largest holding in my Canada portfolio. The stock has been getting hammered due to concerns about private credit defaults in the United States. Brookfield has only minor exposure to that space, mainly through Oaktree, and its private credit holdings are generally considered better than average for the sector.

So, what is Brookfield?

It is several things:

  1. A financial conglomerate.
  2. Canada’s biggest and most prestigious asset manager.
  3. A direct investor in renewable energy and infrastructure projects.
  4. A re-insurer and private equity manager.
  5. The owner of a collection of high-quality real estate holdings in major U.S. cities.

Brookfield has one of the best collections of assets of any company on earth. That much is widely acknowledged. What’s less widely acknowledged is Brookfield’s strong growth prospects and modest valuation.

Incredible deals

Brookfield Corp has a lot of growth potential, as indicated by the deals its subsidiaries, Brookfield Infrastructure and Brookfield Renewable, are undertaking. These include the following:

  • Brookfield Renewable’s agreement to supply Microsoft with 10.5 gigawatts (GW) of renewable power.
  • Brookfield Infrastructure has many deals in the U.S. data centre space.
  • Brookfield Renewable’s agreement to provide Alphabet with three GW of renewable power.
  • A partnership with Qatar to build out AI infrastructure in that country.

Broadly, this is one of the most prestigious sets of deals any company has in the pipeline. In addition to these, Brookfield Asset Management (TSX:BAM) also has $100 billion worth of committed but not yet invested capital. That should drive more growth in fee-related earnings in the future.

A modest valuation

Despite all of the positive things it has going for it, Brookfield nevertheless has a modest valuation, trading at the following:

  • 18 times distributable earnings.
  • 1.11 times sales.
  • 1.97 times book.
  • 8.6 times cash flow.

These multiples are far below average for the markets these days. Compared to the amazing deals Brookfield has in the pipeline and the growth it has on the horizon, they add up to a small price to pay for one of Canada’s best companies.

Foolish takeaway

Taking everything into account, Brookfield Corp is a very strong company. It’s financially strong, it’s profitable, it’s growing, and it has many lucrative deals underway. If I had to hold just one Canadian stock, this would be it.

The post If I Could Only Buy and Hold a Single Stock, This Would Be it appeared first on The Motley Fool Canada.

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Fool contributor Andrew Button has positions in Brookfield, Brookfield Asset Management, TD Bank and Alphabet. The Motley Fool has positions in and recommends Brookfield. The Motley Fool recommends Alphabet, Brookfield Asset Management, Brookfield Corporation, Brookfield Infrastructure Partners, Brookfield Renewable, Brookfield Renewable Partners, and Microsoft. The Motley Fool has a disclosure policy.

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