Want to Beat the Market? Seek U.S. Exposure With These Stocks

As the Canadian market slouches, stocks such as CAE Inc. (TSX:CAE)(NYSE:CAE) should draw appeal due to U.S. exposure.

| More on:
The Motley Fool

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Indexes in the United States plummeted on March 23, as the global rout, sparked by trade war fears, was exacerbated following the announcement of possible tariffs on Chinese goods that could exceed $60 billion. The S&P/TSX Index dropped 176 points on Friday, marking the second triple-digit loss in a row. The index has now declined 6% in 2018 thus far.

In spite of the recent turbulence, U.S. indexes have provided double-digit returns year over year, while the TSX index has failed to generate a year-over-year return above the inflation rate. After some initial back and forth, the U.S. and China may soon come to the table to avoid an all-out trade war. Let’s take a look at companies that have a sizable footprint south of the border that could benefit from tax reform and other developments.

CAE Inc. (TSX:CAE)(NYSE:CAE)

CAE is a designer, manufacturer, and supplier of simulation equipment for the aerospace industry. CAE stock has dropped 2.3% in 2018 thus far. This past week, CAE agreed to provide training solutions to NH90 military helicopters that will be acquired by Qatar. In January, CAE acquired U.S. and Canadian military contracts that were worth upwards of $1 billion.

The $1.3 trillion omnibus bill, which was signed by President Donald Trump after some fanfare and disagreement within the Republican Party, includes the largest increase in defence spending in 15 years. The U.S. Department of Defense will see its budget jump by $61 billion for a top line of $700 billion. Canada also has also unveiled to hike its defence spending by 73% over the next decade. CAE will stand to benefit from this trend going forward.

Toronto-Dominion Bank (TSX:TD)(NYSE:TD)

TD Bank stock plunged 2.27% on March 23 as financials were pummeled in the U.S. and Canada on global trade war fears. The drop put TD Bank stock into the red for 2018. TD Bank released its first-quarter results on March 1.

Its U.S. Retail banking segment posted adjusted net income of $1.024 billion, which represented a 28% increase year over year. In December, the Trump administration signed through legislation that saw corporate taxes slashed from 35% to 21%. TD Bank reported a one-time tax charge of $405 million in the first quarter, but leadership is confident that tax reform will be a significant net positive for earnings going forward.

Boyd Group Income Fund (TSX:BYD.UN)

Boyd Group is a Winnipeg-based auto body collision repair company. The company operates in four Canadian provinces and 14 U.S. states under the trade name Gerber Collision & Glass. Boyd Group released its 2017 fourth-quarter and full-year results on March 21.

In 2017, sales rose 13.1% to a record $1.6 billion. Adjusted EBITDA surged 17.2% to $145.6 million, and the company posted adjusted net earnings of $58.8 million, representing an 11.8% increase from 2016. Boyd Group announced in its earnings that 40-50% of its tax reduction would go to benefit enhancements for its U.S. employees. The company announced a modest dividend of $0.04 per share, representing a 0.5% dividend yield.

Should you invest $1,000 in Canadian Tire right now?

Before you buy stock in Canadian Tire, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Canadian Tire wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,058.57!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 38 percentage points since 2013*.

See the Top Stocks * Returns as of 2/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Investing

Oil industry worker works in oilfield
Dividend Stocks

Is CNQ Stock a Buy While it’s Below $45?

CNQ is up more than 10% in recent weeks. Are more gains on the way?

Read more »

chart reflected in eyeglass lenses
Dividend Stocks

The Smartest Dividend Stock to Buy With $1,000 Right Now

Telus (TSX:T) stock could be a smart dividend pick-up right here!

Read more »

dividends can compound over time
Dividend Stocks

Where Will Brookfield Infrastructure Partners Stock Be in 5 Years?

The pullback in Brookfield Infrastructure Partners stock is good opportunity for long-term investors with an income focus.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Friday, March 21

With 2.1% week-to-date gains, the TSX Composite Index seems on track to end a two-week losing streak, supported by investors’…

Read more »

3 colorful arrows racing straight up on a black background.
Dividend Stocks

These Are the Highest-Yielding Stocks on the TSX Right Now 

Let’s look at some of the highest-yielding stocks on the TSX right now and see how you can make the…

Read more »

grow money, wealth build
Retirement

Maximizing TFSA Growth: Top Investment Choices for 2025

Two resource companies are the top investment choices for 2025 to maximize TFSA growth.

Read more »

Man looks stunned about something
Tech Stocks

Tariff Worries: How Canadian Investors Can Hedge Their Portfolios Now

Worried about tariffs? Welcome to the club. So here are two Canadian stocks to help ease your anxieties.

Read more »

Paper Canadian currency of various denominations
Bank Stocks

Is BNS Stock a Buy While it’s Below $70?

Bank of Nova Scotia is down 10% in 2025. Is the stock oversold?

Read more »