2 TSX Top Stock Picks for a TFSA Retirement Fund

TFSA investors may wish to top-up with Suncor Energy (TSX:SU)(NYSE:SU) and another high-quality Canadian stock on any weakness in April.

| More on:
Female hand holding piggy bank. Save money and financial investment

Image source: Getty Images

Your TFSA (Tax-Free Savings Account) is an invaluable tool that you should use to invest, even when the broader markets are a tad on the choppy side. Indeed, it’s hard to find it within you to put money to work on stocks with all the negative headlines out there these days. The Ukraine-Russia war, COVID, rate hikes, and an inverted yield curve are just a few of the reasons why many TFSA investors are feeling just a bit on edge.

The S&P 500 is currently down around 9% from its high, with the recent relief rally failing in a very sharp and vicious way. With commodities and value holding up the TSX Index, there are many reasons to stay within the confines of Canada with your next big purchase. This selloff is concentrated in growth-focused tech. Remember, higher rates are worst for these types of companies that only trade by their sales. With no earnings to go by, it’s tough to evaluate a firm, unless you know with certainty where rates will end up in 2024 or 2025.

TFSA investors: Staying with quality and value

Fortunately, you don’t need to jump into the deep end of the pool with battered growth if you’re not comfortable doing so with your TFSA. Your TFSA should be investing wisely, not speculating on opportunities to make a quick buck in a hurry!

In this piece, we’ll look at two TSX stocks that I think are great additions to any long-term-focused TFSA retirement fund. While they could be vulnerable to downside going into the latter half of the year, I think that in the grander scheme of things, they’ll come out on top.

CN Rail

CN Rail (TSX:CNR)(NYSE:CNI) is the boring Canadian railway stock that we’re all familiar with. If you own a Canadian index fund, odds are, you already have a good amount of exposure. Still, I think there are reasons to get more than market weight in the railway, even if the economy flirts with a recession within the next 18 months.

The company is vital to the health of Canada’s economy, and given how diversified its segments are, the railway should be able to hold its own better than the rest once the time comes for the economy to contract. Indeed, CN Rail was a pillar of stability during the 2008 recession. With a new CEO aboard and a plan to slowly move towards its former glory, I think TFSA investors should act on any dips. Down around 6.5% from its high, CNR stock looks like an intriguing pick-up at 23.1 times trailing earnings with its 1.85% dividend yield.

Indeed, you can’t keep such a powerful wide-moat firm depressed for very long. It keeps on rolling, and investors should pounce whenever they’re served up a decent entry point.

Suncor Energy

Energy prices have been skyrocketing into the stratosphere of late. Shares of Suncor Energy (TSX:SU)(NYSE:SU) was one of the boats that was lifted higher by the rising industry tides, now up 65% over the past year. Despite the momentum behind the name, the stock remains cheap and bountiful, with a 15.5 times trailing earnings multiple and a 3.9% dividend yield.

If oil slips, Suncor stock will take a hit to the chin. But if you’re like many young TFSA investors who are short on energy exposure, Suncor is one of the cheap integrated plays that can help improve your overall risk/reward scenario. The way I see it, Suncor is a momentum stock, a value stock, a dividend play, and an excellent hedge all in one.

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 Joey Frenette owns Canadian National Railway. The Motley Fool recommends Canadian National Railway.

More on Investing

movies, theatre, popcorn
Investing

Is it Still Prudent to Invest in Cineplex Stock?

Have you considered Cineplex (TSX:CGX) recently? Cineplex stock still trades at a deep discount, but is it worth it?

Read more »

Road sign warning of a risk ahead
Investing

Top Canadian Growth Stocks for Aggressive Investors in 2024

Of the many sectors seeing growth, investors will want to continue watching these growth stocks for the remainder of 2024.

Read more »

Retirement
Retirement

Retirees: Here’s How to Boost Your CPP Pension

Here's how Canadian retirees can boost their CPP payouts by investing in blue-chip dividend stocks in 2024.

Read more »

man touches brain to show a good idea
Tech Stocks

Nvidia Stock Becomes World’s Most Valuable Company: Buy Now or Beware?

Nvidia (NASDAQ:NVDA) stock is now the world's highest valued company, with a market cap of US$3.34 trillion. So, is the…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

5 Canadian Stocks to Buy and Hold Forever in Your TFSA

Investing in stocks is not always about timing but about holding. Instead of looking at the price, look at the…

Read more »

Oil industry worker works in oilfield
Top TSX Stocks

Just Released: 5 Top Stocks to Buy in June 2024 [PREMIUM PICKS]

This month’s collection of our five favourite stocks leans hard on the energy sector.

Read more »

Dice engraved with the words buy and sell
Tech Stocks

Is Lightspeed Stock a Buy, Sell, or Hold?

Lightspeed (TSX:LSPD) stock was supposed to surge after Dax Dasilva's return, yet it's still stagnating. So, what should investors do…

Read more »

Gas pipelines
Energy Stocks

Buy, Sell, or Hold Enbridge Stock

Are you considering Enbridge (TSX:ENB)? Enbridge stock is a popular holding, but not all investors agree on whether you should…

Read more »