TFSA Investors: 2 TSX Winners in 2022 Could Keep on Shining in 2023

Fairfax Financial Holdings and another stock that make for a great TFSA purchase this February.

| More on:
Path to retirement

Image source: Getty Images

It’s been a great kick-off to 2023 for investors hanging in there. But risks still remain, as Canada looks to enter a recession. Markets may be looking into the future, but there’s a chance that they may be looking too far into the future, perhaps underestimating the bumpiness of the road that lies between now and the recession’s end. If there are bigger bumps in the road that markets can’t see today, a correction is always a possibility.

Right now, pundit correction calls are loud and clear. That said, I wouldn’t dump recent gains either, as there’s always a chance the Federal Reserve says something that provides investors with relief, rather than angst.

In this piece, we’ll look at two TSX winners from last year that still offer a decent value for investors. Whenever you’ve got a good mix of stock-price momentum and sound value, you could have a timely name worthy of stashing in your TFSA for the long term.

Without further ado, let’s consider Fairfax Financial Holdings (TSX:FFH) and Waste Connections (TSX:WCN), two winners that could continue winning, even if we’re bound for more bumps in the road into and out of a potential recession.

Fairfax Financial Holdings

Fairfax Financial Holdings is an insurance and investment holding firm run by legendary value investor Prem Watsa. He’s best known as the Canadian Warren Buffett. Personally, I don’t find much similarity between the two iconic investors. First, Watsa makes good use of hedges and tends to target deep-value investments, whereas Buffett is more about buying “wonderful businesses at fair prices” and isn’t much of a user of hedge fund-esque securities to protect against market crashes.

Undoubtedly, Watsa’s hedges paid off big during the Financial Crisis. However, hedging has curbed returns when times were good. Timing the macro is hard. But I still think Watsa is deserving of respect for navigating Fairfax flawlessly through the 2008 stock market crash, even though it may be tougher to repeat the same resilience for the next meltdown.

Regardless, I do think Watsa is a fantastic investor. Last week, Fairfax got a big upgrade from BMO Capital Markets’ Tom MacKinnon, who raised shares to outperform from market perform. MacKinnon was a fan of its “strong underwriting income” in the challenging environment.

The stock’s up over 36% over the past year. With underwriting improved and Watsa continuing to make smart moves, I view Fairfax as a worthy market bargain with shares going for just 1.2 times price-to-book.

Waste Connections

Waste Connections is a wide-moat company that investors can buy and forget (hold) for decades without losing much sleep. The stock’s up around 16% over the past year, thanks in part to some solid second- and third-quarter numbers, which both beat on the bottom line.

The company doesn’t always beat (it missed by a penny in Q1). However, you won’t get much in the way of shockers with the waste collector. It’s about as stable a business as you could ask for. In uncertain times, I’d argue a huge premium is deserved.

The stock trades at 42.9 times trailing price-to-earnings. That’s quite rich, but if you want a firm with defensive growth prospects, the name is tough to pass up, even at these heights. In short, Waste Connections is a wonderful business at a pretty fair price in my books.

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 positions in and recommends Fairfax Financial. The Motley Fool has a disclosure policy.

More on Investing

edit Sale sign, value, discount
Energy Stocks

2 Cheap Canadian Stocks You Can Buy for Less Than $50

You can buy Suncor Energy stock, and this gold stock at cheap valuations today

Read more »

A airplane sits on a runway.
Stocks for Beginners

Are Airline Stocks a Good Buy in March 2023?

Few companies have felt the pandemic as much as airlines. But now that markets are open, are airline stocks a…

Read more »

Happy diverse people together in the park
Dividend Stocks

Gen Z Investors: How to Make $2.8 Million Before Retirement

Gen Z investors have one thing to their advantage: time. Invest wisely and practically any investment could turn into millions.

Read more »

A plant grows from coins.
Dividend Stocks

The 2 Top Monthly Dividend Stocks for March 2023

These are the top two monthly dividend stocks you can buy in Canada in March 2023.

Read more »

Target. Stand out from the crowd

If I Could Only Buy 1 Stock Right Now, This Would Be it

Are you looking for that one stock to add to your portfolio? This would be my top pick right now.

Read more »

Canadian Dollars
Dividend Stocks

Got $6,500? Earn $48/Month Tax-Free Passive Income

High-dividend-paying Canadian stocks include Diversified Royalty. Let's see how a TFSA investment of $6,500 can help you earn $48 in…

Read more »

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

Better Buy: Shopify vs. Constellation Software

Are you interested in buying a tech stock? Find out which is the better buy between Shopify and Constellation Software.

Read more »

Piggy bank next to a financial report
Bank Stocks

U.S. Bank Meltdown: These 2 Canadian Banks Are Safer

Canadian banks like Royal Bank of Canada (TSX:RY) are safer than the collapsing U.S. banks.

Read more »