Trade tensions are heating up again, and investors are taking notice. Canada and the United States continue to clash over tariffs, with new policies threaten to impact key industries. When tariffs rise, the cost of doing business increases. Companies that depend on cross-border trade may struggle with higher expenses, supply chain delays, and reduced profit margins. This kind of uncertainty can make the stock market more volatile, leaving investors wondering how to protect their portfolios.
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Stocks to consider
While no investment is entirely immune to market swings, certain stocks tend to hold up better when trade disruptions occur. The key is finding businesses that either benefit from market uncertainty or operate largely within Canada, reducing exposure to international risk. Precious metals have long been a safe-haven investment in times of economic turmoil, making gold- and silver-related stocks appealing. Another strategy is investing in companies that help businesses navigate supply chain challenges, which become more common when tariffs disrupt trade.
For Canadian investors looking to hedge against tariff-related risks, two strong options on the TSX stand out. Those are Kinaxis (TSX:KXS) and Wheaton Precious Metals (TSX:WPM). First, Kinaxis provides supply chain management software that helps businesses adapt to trade disruptions. Meanwhile Wheaton Precious Metals gives investors exposure to gold and silver – two assets that tend to gain value when economic uncertainty rises.
Kinaxis
Kinaxis is a supply chain management software company based in Ottawa. It provides cloud-based services that help businesses plan, analyze, and respond to supply chain challenges in real time. When tariffs increase, companies need to make quick adjustments to sourcing and logistics. That’s where Kinaxis comes in. By using its software, businesses can predict disruptions, shift suppliers, and optimize supply chains, helping remain profitable even in difficult conditions.
The company’s business model is built around recurring revenue, primarily through its Software-as-a-Service (SaaS) subscriptions. This provides stability, as customers typically stay locked into long-term contracts. Companies across industries, from manufacturing to pharmaceuticals, use Kinaxis to manage their operations efficiently. As trade becomes more complex, demand for Kinaxis’ services is likely to increase.
Its latest earnings report for Q3 2024 showed strong growth. Total revenue hit US$121.5 million, up 12% from the same period the previous year. The company’s SaaS revenue grew by 16% to US$78.6 million. While adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 32% to over US$30 million. These numbers highlight how Kinaxis continues to expand, even as businesses face increasing trade pressures. With a market capitalization well above $200 million, it remains a solid pick for investors looking to hedge against trade-related risks.
Wheaton
On the other side of the investment spectrum is Wheaton Precious Metals, based in Vancouver. Unlike traditional mining companies, Wheaton doesn’t operate mines. Instead, it provides upfront financing to mining companies in exchange for the right to purchase gold, silver, and other metals at a fixed, low cost. This streaming model allows Wheaton to benefit from precious metals production without taking on the risks and expenses of running a mine.
Precious metals have long been a hedge against economic uncertainty. When trade wars escalate, inflation rises, or markets become unstable, investors often turn to gold and silver as safe-haven assets. Wheaton offers exposure to these metals without the operational risks of mining, making it an attractive option when market volatility increases.
Its fourth-quarter 2024 earnings reinforced its strong financial position. The company reported revenue of US$381 million, a sharp increase from previous quarters. Operating cash flow hit a record US$319 million, and net earnings came in at US$88 million. Adjusted net earnings reached an all-time high of US$199 million. These results reflect strong demand for precious metals and Wheaton’s ability to generate significant profits in uncertain times.
Bottom line
Diversification is key when hedging against risks, and combining these two stocks in a portfolio could offer both growth potential and stability. As tariffs and trade policies continue to shift, investors who take a proactive approach may find themselves better positioned to weather the storm. While trade tensions create uncertainty, they also present opportunities. And knowing where to look can make all the difference.
