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The 2 Best Stocks to Invest $1,000 in Right Now

Alex Smith

Alex Smith

2 hours ago

4 min read 👁 2 views
The 2 Best Stocks to Invest $1,000 in Right Now

The stock market has been very shaky since the U.S. entered war with Iran. The S&P/TSX Composite Index is down 4.6% in the past month. People are once again concerned that elevated energy prices could lead to a spike in inflation and potentially a rise in interest rates from here.

Certainly, investors need to be on their toes in these markets. Yet, the volatility can create attractive buying opportunities if you don’t mind looking out a few years. If you are wondering what stocks look attractive, here are two unique stocks that offer you a mix of defence and value.

A top defensive stock

Pembina Pipeline (TSX:PPL) is one stock that is benefitting from recent energy price acceleration. Its stock is up 4% in the past month and 17% year to date.

With a market cap of $35 billion, Pembina is a top four energy infrastructure company. Pembina makes around 85% of its income from contracted energy volumes tolling through its assets. Largely, this is very safe, predictable income. Its contracted income widely supports its dividend.

However, around 15% of its business is exposed to energy pricing. A massive amount of LNG (liquified natural gas) and LPG (liquified petroleum gas) is held up in the Middle East right now. Countries in Asia are desperate for more. Pembina operates an LPG export terminal in B.C. and should see strong throughput from this facility.

Likewise, Pembina has one of only a few LNG export facilities in construction. Once complete, it expects to see very strong volumes through the asset.

Right now, Pembina trades at a discount to the larger pipeline stocks. Investors could see that multiple increase as it continues to execute its smart capital plan. While you wait, investors can collect a 4.7% dividend yield.

A top value pick

Colliers International Group (TSX:CIGI) is the value pick in this mix. Its stock is down 28% this year. CIGI is trading for an attractive price-to-earnings (P/E) ratio of 13. It has a forward free cash flow yield of 8%. According to history, its P/E valuation tends to bottom at around 11.5, so it doesn’t look too far from the bottom.

Colliers is a quality, diversified business. It is a leader in real estate services, but it also has growing investment management and engineering/project management businesses. Many people don’t recognize that over 70% of its income is recurring.

While Colliers is probably best known for its cyclical commercial real estate brokerage business, it is much less exposed to cyclicality than it used to be. Colliers is very acquisitive, and it made several smart additions in the engineering space this year.

Colliers has a smart and highly invested management team. Its CEO was a recent buyer of the stock. The company has a long history of compounding value for shareholders. If you can look past some of the current volatility, this could be a great stock to buy at a trough valuation.

The post The 2 Best Stocks to Invest $1,000 in Right Now appeared first on The Motley Fool Canada.

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Fool contributor Robin Brown has positions in Colliers International Group. The Motley Fool has positions in and recommends Colliers International Group. The Motley Fool recommends Pembina Pipeline. The Motley Fool has a disclosure policy.

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