3 Stocks to Hold With a Weak Canadian Dollar

A low Canadian dollar can provide a boost for stocks like Stella-Jones Inc. (TSX:SJ) and others.

| More on:

The Canadian dollar has struggled since the U.S. dollar began to strengthen significantly in late 2016 and early 2017. Canada’s dollar continued to weaken throughout 2018 as the economy sputtered in comparison to booming activity south of the border. The dollar rallied with the TSX at the very beginning of 2019, but appears to have restarted its downward trajectory.

Late last week the Canadian yield curve inverted, which sent the dollar to a two-week low. Canadians retail sales also came in weaker, driving anxiety about the state of the economy. The TSX had already looked overvalued heading into the spring.

Today we are going to look at three companies that benefit from a low Canadian dollar. However, those looking to buy may want to wait on the sidelines, as risk is bound to return to North American markets after this yield curve inversion for the U.S. and Canada.

AirBoss of America (TSX:BOS)

AirBoss of America is an Ontario-based manufacturer of rubber-based products for the resource, military, automotive, and industrial markets. Shares of AirBoss have dropped 4.6% in 2019 as of close on March 22. The stock is down nearly 34% from the prior year.

What makes AirBoss attractive under a weak Canadian dollar? Well, most of its sales are in U.S. dollars. For the full-year 2018, AirBoss reported that consolidated net sales increased 9.2% from 2017 to $316,603. The board of directors approved a quarterly dividend of $0.07 per share. This represents a solid 3.4% yield.

CCL Industries (TSX:CCL.B)

CCL Industries is a Toronto-based manufacturer and seller of packaging and packaging-related products. Shares have climbed 5.8% in 2019 so far. The stock is down 16.5% year over year.

CCL Industries posts most of its sales in non-Canadian denominated currency. In 2018 CCL reported that sales increased 8% from the prior year, while also posting 4.8% organic growth. Free cash flow from operations rose $4.2 million from the prior year to $442.5 million. Foreign currency translation had a positive impact of $0.02 on earnings per Class B share in 2018.

CCL Industries also announced a 31% increase to its dividend to $0.17 per class B share, which represents a modest 1% yield.

Stella-Jones (TSX:SJ)

Stella-Jones is a Quebec-based company that sells lumber and wood products. Its stock has increased 7.9% in 2019 so far. Shares are still down 4.9% from the prior year.

Stella-Jones manufacturers railway ties and utility poles, most of which are shipped for sale south of the border. Sales climbed 12.6% from the prior year in 2018 to $2.12 billion, which was largely due to sales price increases and higher demand. The company has also been a beneficiary of US tax reform, though the 2017 windfall resulted in lower year-over-year net income.

Stella-Jones increased its quarterly dividend by 16.7% to $0.14 per share. This represents a modest 1.1% yield. The company forecasts higher year-over-year sales for 2019 based on market conditions and stable currencies.

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 stocks mentioned. CCL is a recommendation of Stock Advisor Canada.

More on Investing

An investor uses a tablet
Stocks for Beginners

If I Could Only Buy 2 Stocks in the Last Half of 2024, I’d Pick These

I’m looking to buy two stocks over the next month. Here’s a look at my picks and why you should…

Read more »

gift is bigger than the other
Investing

Millennials: 1 Growth Stock Set to Shine in 2025

Shopify (TSX:SHOP) stock could be worth betting on as it goes for growth in the new year!

Read more »

up arrow on wooden blocks
Stock Market

2 Stocks I’ll Be Adding to My RRSP — Even With the TSX at All-Time Highs

Calian Group and Pan American Silver are two TSX stocks trading at an attractive multiple that can generate market-beating returns…

Read more »

dividends can compound over time
Investing

Here Are My Top 2 TSX Stocks to Buy Right Now

Shares of these fundamentally strong TSX companies have significant room for further growth, making them compelling investments right now.

Read more »

A worker drinks out of a mug in an office.
Dividend Stocks

Is Brookfield Infrastructure Partners a Buy for its 4.75% Yield?

Brookfield Infrastructure Partners (BIP) has a 4.75% dividend yield. Is it worth it?

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Monday, November 4

In addition to the ongoing corporate earnings season, the U.S. presidential election and the Federal Reserve’s interest rate decision could…

Read more »

calculate and analyze stock
Investing

2 Top Value Stocks I’d Happily Scoop Up in November

Here are two top value stocks I'm seriously considering adding this month. They are likely to continue to accumulate over…

Read more »

A data center engineer works on a laptop at a server farm.
Tech Stocks

3 No-Brainer Data Centre Stocks to Buy With $500 Right Now

Data centres are going to be a huge growth opportunity in the next decade. And these are the top buys.

Read more »