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After an eventful 2022 and now a tonne of uncertainty as we begin 2023, picking the right stocks for your portfolio is as important as ever. Not only do you want to take advantage of the market environment and buy TSX stocks while they’re cheap, but you also want to ensure that many of the stocks you own are high-quality businesses that can weather the current economic climate.
For most investors, the stocks you buy now will largely depend on how your portfolio already looks. If you own many high-quality and defensive stocks, you may want to consider buying a high-potential growth stock while it trades ultra-cheap.
Conversely, suppose you’ve been buying the dip lately. In that case, you may want to consider buying a more defensive stock that can continue to operate well and earn a profit, even if the economy slips into a recession.
Then there are some stocks that offer investors the best of both worlds. These are high-quality growth stocks that trade cheaply but also operate in defensive industries, making them ideal in the current environment.
So, if you’re looking for high-quality TSX stock ideas to buy for your portfolio, here’s one that’s at the top of my buy list.
One of the best defensive growth stocks to buy on the TSX
One of the best TSX stocks that Canadian investors can buy now, and one I plan to take a position in this year, is Jamieson Wellness (TSX:JWEL).
Jamieson Wellness is a well-known manufacturer, distributor, and marketer of natural health products. Furthermore, with the stock constantly looking to grow its operations, it’s a high-quality growth stock to buy and hold for years.
One reason Jamieson is such an excellent TSX stock to buy is that healthcare is one of the most defensive sectors there is. Furthermore, with an ageing population and a growing trend of consumers looking to improve their self-care, not only can Jamieson continue to operate well through this economic environment, but it can continue to grow at an exceptional pace.
In fact, over the last few years, its growth has actually been accelerating. For example, from 2000 to 2020, Jamieson’s revenue increased at a compound annual growth rate (CAGR) of 8.3%. However, since going public in 2017 up until the end of 2021, its sales increased at a CAGR of 10.6%.
Furthermore, over that same stretch since going public in 2017, its earnings before interest, taxes, depreciation, and amortization (EBITDA) has increased at a CAGR of 13%.
Going forward, Jamieson plans to continue improving its margins, largely through scaling its manufacturing and investing in finding cost efficiencies.
Jamieson is trading at an attractive valuation
In addition to Jamieson’s high-quality and defensive business operations, another reason why it’s a TSX stock I plan to buy soon is that it currently trades at a compelling valuation.
With Jamieson stock trading at roughly $35 a share, the stock currently has a forward enterprise value-to-EBITDA ratio of just 13 times. That’s below its three-year average of 15.8 times and just off its all-time low of roughly 11 times. Furthermore, all five analysts that cover the stock give it a buy rating.
Therefore, if you’re looking for a high-quality TSX stock to buy in this environment, Jamieson is cheap, has tonnes of growth potential, and is highly defensive.