TFSA investors shouldn’t make too much of the modest dip in the S&P 500. Sure, the U.S. (especially the tech-heavy Nasdaq 100) has been off to the races since the last quarter of last year. And though the latest parabolic move higher may have been offputting to some, I don’t think stocks are necessarily due for a correction, or a 10% drop from peak to trough.
Why? Look no further than last year! It was a miserable time for stocks just under a year ago today. The bear market was alive and well in the U.S. and it seemed like everyone was worried about the coming recession. Indeed, it’s not hard to imagine many such investors preparing accordingly for the difficult times ahead.
Fast forward to today, and there’s no recession yet. In fact, some pundits may think a recession can be avoided. That so-called “soft landing” for the economy would have seemed like a long shot a year ago. Today, it’s looking increasingly likely.
So, as the stock market looks to wander closer to new highs in the second half, don’t find the need to hit the sell button unless a stock you’re looking to trim has a market price that’s well above your personal estimate of its intrinsic value. In such a scenario, one should seek to lighten up and take gains, regardless of what experts think is next up for broader markets.
In this piece, we’ll take a look at two proven market-beaters that have had their way over the last several years. Moving forward, I think more of the same is to come. So, without further ado, consider the following TSX stocks if you’re in the market for a good risk/reward option over the next five years out.
CN Rail
CN Rail (TSX:CNR) hasn’t been too hot of a stock of late, with shares actually down just shy of 3% year to date. Still, the farther back you look, the more impressive the results relative to the TSX Index. Over the past five years, shares are up 37%. Modest, but still higher than the 4.3% delivered by the TSX.
For CN’s standards, though, the recent results haven’t really been incredible. With a new CEO looking to work her magic, I’d look for the pace of gains to increase over the next three to five years. Indeed, I think the next five years will be more bountiful than the last, as the company looks to drive operational efficiencies where possible.
The stock trades at under 20 times trailing price-to-earnings, with a 2.01% dividend yield. I think it’s a great buy here if you’re in it for the long run.
TFI International
TFI International (TSX:TFII) is a trucker that’s at a fresh new all-time high right now. The stock has been quite volatile in recent years. The 1.44 beta (meaning more correlation to the TSX Index) implies such. Still, those who braved the ride have been rewarded with incredible gains. Over the past five years, shares have surged 276%.
That’s a remarkable result from a company that’s not exactly high-tech or innovative. In any case, I think TFI stock is still cheap at 18.4 times trailing price-to-earnings. With a 1.05% yield, I view TFI as a dividend-growth play to buy for your TFSA, even at new highs of around $176 per share.
