Just Released: 5 Best Motley Fool Stocks to Buy in December

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The season for many things is upon us and many investors are looking ahead to the year ahead. But if experience has taught me anything, it’s that making short-term forecasts is a waste of anyone’s time. After all, no one knows the details of what the future holds.

But everyone should know that they will rhyme with the generalities of the past.

This means that in 2025, Canadian investors will be well prepared for the road ahead. The reason for this is (while gold in Canada and the sphere of influence around ‘AI’ in the US have carried the story) somewhat behind the scenes a whole slew of high-quality companies have become quite cheaper than they were to start the year. Although relatively buried on page 12, so to speak, multiple contractions is another common theme of the past twelve months.

History suggests that buying a company for twenty times earnings is better than, say, buying a company for forty times earnings.

And we believe that at some point we will thank 2025 for these opportunities.

For now, we have the opportunity to share some of our favorite companies that are trading at very favorable prices.

Enjoy!

Silly of you,
Ian Butler
Advisor, Stock Advisor Canada

First Service (TSX:FSV) is a good example of the “multiple contraction” dynamics I explained above.

FirstService is at the higher end of our favorite companies when it comes to business quality, but we haven’t talked about it much because it’s always felt highly appreciated.

We really started looking at FirstService in 2017. Since then, the company has traded at more than 30 times forward earnings. Sometimes for much more. Today the company is available about 25 times. This is more of a relatively cheap situation than an absolute situation, but simply put, this company very rarely goes on sale.

Oh, and exactly what is this company?

FirstService is a North American leader in essential outsourced real estate services, operating through two main divisions:

1. FirstService Residential: North America’s largest manager of residential communities (condos, co-ops, homeowners’ associations, etc.), managing more than 9,000 communities representing more than 4.5 million residents in 25 U.S. states and three Canadian provinces.
2. FirstService Brands: One of North America’s largest providers of essential real estate services delivered through both corporate operations and franchise systems, including brands such as First Onsite Restoration (commercial real estate restoration), Paul Davis Restoration, Roofing Corp of America, Century Fire Protection, California Closets, CertaPro Painters, Floor Coverings International and Pillar to Post Home Inspectors.

The similarity between these two business units is that they are both focused on recurring revenue streams from essential real estate services that are needed regardless of economic conditions.

To be fair, you’re unlikely to win anyone over if you mention FirstService at a holiday meeting in the coming weeks. But with an open valuation window, you’ll almost certainly get the last laugh in ten years, as this company grows reliably and becomes profitable year after profitable year.