April brought volatility and fear. It started with a sharp dip and fears of a recession. Then came a 90-day tariff pause. However, Canada is not a part of this pause and continues to face tariffs on its exports to the United States. These tariffs can have direct and indirect impacts on Canada and the United States. It is difficult to predict what lies ahead. Such uncertainty creates opportunities to buy value stocks.
How do you know which stock is a value buy? That is where fundamentals come in.
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Where to invest your $7,000 TFSA contribution in April
The TSX Composite Index fell 11% between April 2 and 8 and is now recovering. It is difficult to say if the market has bottomed out or if more downside is coming. A good strategy is to identify the value stocks and keep buying them at every dip. Consider buying using the 2025 Tax-Free Savings Account (TFSA) contribution room of $7,000 to make your gains tax-free.
Index ETFs
Now is a good time to buy index and sector ETFs. History has shown that the market finds its way to thrive. Winners lead, and the losers exit the index.
The Horizons S&P/TSX 60 Index ETF (TSX:HXT) replicates the TSX 60 Index, allowing you to invest in Canada’s strong sectors of finance, energy, industrial services, information technology, and materials. Its low management expense ratio of 0.08% makes it more compelling. Now is the right time to buy this ETF as the value of its holdings has declined. It could give a 20–22% return as the market recovers from a downturn. It gave an annual return of 28% in the 2021 market recovery and 21% in the 2024 market recovery.
Technology ETF
You could consider investing in technology stocks, as technology will continue to evolve and change our lives. The secular trend of artificial intelligence (AI), 5G, and virtual reality is here to stay. The downturn is the perfect time to buy tech stocks. To give you an example of technology and crisis, the 2008 Financial Crisis pulled down the entire market.
Stocks of Amazon and Apple took a hit. However, they revived with the economy and surged by leaps and bounds, making their loyal investors millionaires. Nvidia could be a stock you would be proud to buy on this dip.
You can diversify with the iShares NASDAQ 100 Index ETF (CAD-Hedged) (TSX:XQQ). It holds the leading stocks in AI, autonomous vehicles, 5G, semiconductors, and the entire tech supply chain. The Nasdaq index has surged 1,400% in 16 years since the 2009 dip.
Buying the April dip is essential as it helps you catch up on the last one-year rally. Moreover, the recovery is steeper because a crisis removes weak-performing stocks. Only fundamentally strong companies survive. They enter a market wherein they have a new customer base of fallen competitors to tap.
You could consider investing $2,000 in each of the two ETFs.
Opportunistic stocks to buy in April
You can consider investing in opportunistic stocks like Bombardier (TSX:BBD.B). The business jet maker is exempted from tariffs under the United States-Mexico-Canada Agreement. In the last four years, the company strengthened its balance sheet, with no debt maturities till 2026. Moreover, it is bringing into service its next-generation Global 8000 aircraft.
The possibility of a tariff-led global slowdown could delay some orders. However, its long-term growth trends of selling business jets, servicing and maintaining the jets in operation, modifying the jets for defence use, and refurbishing and selling pre-owned jets remain intact.
Remember, an economic crisis will affect corporate earnings. However, the company’s ability to withstand the crisis and make the most of the recovery drives value. Bombardier stock might continue to fall throughout the year or further, if a recession materializes. You can keep accumulating this stock at every dip because when it jumps, the recovery will be worth the wait.
China’s ban on Boeing’s jets in retaliation for the tariff war could present an opportunity for other business jet makers like Bombardier. It remains to be seen how a supply chain shift, if any, bodes for Bombardier.
