The current market is difficult to navigate for most investors. Indeed, according to certain parameters, there has never been a more expensive market on which to negotiate. Therefore, investors may rightly seek to add some defensiveness to their portfolios today.
Diversification is everything, and these two stocks offer diversification in spades. Here’s why I think investors would do well to consider these stocks now.
With respect to Canadian banks, Canadian Imperial Bank of Commerce (TSX: CM) (NYSE: CM) is a great choice.
This lender continues to have more exposure to the Canadian housing market than its peers. However, in recent years this has actually worked in CIBC’s favor.
That said, CIBC is increasingly diversifying its sources of revenue outside of this sector. The bank is well increasing its revenue streams from other lines of business and has rebounded from the effects of the pandemic better than many expected.
In the company’s last first quarter earnings report, the published numbers were pretty good. CIBC shareholders have benefited from continued reduction in loan loss provisions as well as organic growth. Net profit increased to 1.63 billion US dollars for the first quarter. As a result, investors saw a 34% year-over-year increase, which was significantly higher than analysts’ expectations.
The more than 30% increase in CIBC shares since the start of the year is a testament to these incredible results. In fact, CIBC has been one of the best performing large banks in Canada lately. I think that momentum is likely to continue and I would recommend this 4.2% return at this time.
For those looking for a real defense, there is no better area to watch than precious metals. Indeed, in the space of precious metals, miners like Barrick Gold (TSX: ABX) (NYSE: GOLD) today offer excellent diversification potential.
The inherent defensive character of gold goes without saying. It is one of the oldest hedges in the world. As a result, for those worried about the impacts that inflation and rising rates can have on the stock market, this is one of the best ways to combat this environment.
Barrick Gold has done well lately, boosted by rising gold prices. In recent days, gold has crossed the US $ 1,900 per ounce range and continues to climb. Many believe that gold may soon break its all-time high.
For those who are bullish on gold prices and high quality blue chip gold miners, Barrick is a top choice. The company has some of the highest quality and largest gold reserves in the mining industry. It is also very diverse, with operations all over the world.
Investors can’t go wrong with either choice today. These two companies are the ones I would definitely recommend to those who don’t know what the future holds today.
Do you like those defensive choices? Here are some other great options to choose from:
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This article represents the opinion of the writer, who may disagree with the âofficialâ recommendation position of a premium Motley Fool service or advisor. We are Motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we’re posting sometimes articles that may not conform to recommendations, rankings or other content.
Silly contributor Chris MacDonald has no position in any of the listed securities.