Start Your TFSA With 2 Wealth-Building Stocks

TFI International (TSX:TFII) and another wonderful stock I’d look to buy more of on weakness.

| More on:
grow money, wealth build

Image source: Getty Images

Tax-Free Savings Account (TFSA) investors focused on building wealth over the long run should be happy that markets are in a funk. Over the long haul, it’s those investors who continue to stay the course that tend to build more wealth than the easily rattled. Now, investing in the heat of a bear market is not easy. A recession looms, and coming quarterly reveals are sure to be nail biters. It’s never easy to be an investor at a time like this. But if you can embrace the volatility and anxiety that could lie ahead, there are considerable rewards to be had.

Being a brave TFSA investor when things have soured could accompany outsized gains. That said, going against conventional wisdom alone isn’t enough. Investors must put in extra homework here, rather than going against the trend with falling knives that may not bounce back over the course of the decade.

Of course, the falling knives in the tech sector may still be too risky to own, even for long-term thinkers who are no strangers to off-the-charts levels of volatility. At the end of the day, investors should not position their portfolios in a way that depends on a return to low rates.

Rates could stay elevated for longer. Though a recession may induce a reversal of recent rate hikes, it’s unclear as to where interest rates will settle once the storm of 2023 is over with. Ultimately, it depends on how inflation reacts from here. Indeed, many pundits think inflation has peaked. I think it has. Still, the Fed likely needs to stay on top of inflation to prevent another uptick.

Indeed, some very bitter medicine may be needed to combat inflation.

In this piece, we’ll consider two stocks that should do well over time, regardless of what 2023 has in store.

Waste Connections

Waste Connections (TSX:WCN) is a terrific wide-moat stock for all seasons. Over the past 10 years, it’s been a relatively steady upward ride. The firm is a major operator in the U.S. and Canada, where it derives 86% and 14% of its revenues, respectively.

Though more waste needs to be managed when times are good, there’s still a good amount when times are bad. With a mere 0.66 beta (a beta lower than one implies less correlation to the stock market) and TSX-crushing returns over time, Waste Connections is one of few names that can be considered a “smart beta” stock.

At 42.3 times trailing price to earnings, WCN stock commands a premium. But it’s a premium well worth paying for those seeking stability and market-beating returns over time. Indeed, Waste Connections is one of the boring wide-moat stocks that doesn’t tend to surprise investors too much due to its predictability in most economic climates.

TFI International

TFI International (TSX:TFII) is another wide-moat company that offers a necessary service in. The company offers LTL (less-than-load) trucking services to clients in Canada and the U.S.

Though transportation of goods tends to hit a snag in recessions, I view TFI’s managers as the best in their breed. They’ve been through tough times before and have managed to make it through a better firm on the other side. The company has been acquisitive over the past few years and could be ready to make the most of a coming downturn with further mergers and acquisitions.

In any case, TFI stock is a cheap stock that always tends to find its feet after nasty slips. The stock trades at 12.76 times trailing price to earnings, with a 1.4% dividend yield.

Sure, TFI is economically sensitive, but it’s too well run a firm to be held down for too long a duration. Shares are pricier than they were back in spring 2022. However, I still view the name as a great value for TFSA investors seeking a foundation stock.

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 has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Investing

sale discount best price
Investing

Buy the Dip: 2 Strong TSX Stocks That Recently Went on Sale!

Consider buying Parkland Fuel (TSX:PKI) stock and another top dividend play on their recent corrections.

Read more »

A worker uses a double monitor computer screen in an office.
Dividend Stocks

TFSA Investors: 2 Winning Buy-and-Hold Forever Stocks in April 2024

Buy-and-hold stocks are easy enough to find if you limit yourself to dividends, but there are at least a few…

Read more »

worry concern
Dividend Stocks

Telus Stock Is Down to its Pandemic Low of Below $22: How Low Can it Go?

Telus stock is down 37% in two years and is trading near its pandemic low, making investors wonder how low…

Read more »

edit Businessman using calculator next to laptop
Energy Stocks

If You’d Invested $5,000 in Brookfield Renewable Partners Stock in 2023, This Is How Much You Would Have Today

Here's how a $5,000 lump-sum investment in BEP.UN would have worked out from 2023 to present.

Read more »

money cash dividends
Dividend Stocks

Portfolio Payday: 3 TSX Dividend Stocks That Pay Monthly

After adding these three TSX dividend stocks to your portfolio, you can expect to receive attractive monthly income for years…

Read more »

Dividend Stocks

The Top Canadian REITs to Buy in April 2024

REITs with modest amounts of debt, like Killam Apartment REIT (TSX:KMP.UN), can be good investments.

Read more »

edit Person using calculator next to charts and graphs
Stocks for Beginners

Where to Invest $7,000 in April 2024

Are you wondering how to deploy the $7,000 TFSA contribution increase in 2024? Here are four high-quality stocks for earning…

Read more »

Technology
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

Some of the smartest buys investors can make with $500 today are stocks that have upside potential and pay you…

Read more »