CP Rail (TSX:CP) and Enbridge (TSX:ENB) are two incredibly popular Canadian stocks that should be at or around the top of your shopping list when markets begin to head south. Both blue chips have been through tougher times, and they have persevered.
As markets look to surrender a bit of ground on the back of heated U.S. inflation numbers, I’d look to snag a bargain, especially if you’re one of many TFSA investors who have too much cash stashed in a savings account. Sure, cash always makes sense to own in times like this. However, the penalty of inflation will always weigh, making cash not as safe as it seems from a purchasing power standpoint.
Of course, a 15% plunge in a stock over a matter of weeks is less desirable than a 5–6% annual hit. Regardless, those with long-term mindsets should not shy away from quality blue chips if the price of admission is attractive.
Investing through a bear market: Stick with value, stick with quality!
Investing through recessions or bear markets is hard. But if you’re in it for the long run, it’s arguably harder to get out with the intention of getting back in when market volatility settles. By then, the biggest (though probably not easiest) gains will have been made by those who braved the steep bumps in the road.
CP and Enbridge are great businesses, but they’re not immune to macro headwinds. They can be weighed down by a recession, just like other firms. Still, I view both firms as more than capable of managing through harsher times en route to higher levels. Recessions are a test of how durable a firm really is. And at these modest valuations, I’d argue both names are a great pick-up, even with a recession closing in on the global economy.
CP Rail suddenly became the “hottest” railway in North America after it scooped up Kansas City Southern to become the first rail to span Mexico, the U.S., and Canada. Indeed, CP isn’t just that Canadian (mostly domestic) railway anymore. It’s a firm that may possess one of the most attractive growth stories in the rail scene over the next 10 years.
CP CEO Keith Creel has proven he’s a capable leader. The man has been on the helm for just north of six years. Over the past five years, the stock has soared over 130%. Undeniably, Creel has made his mark and seems ready to take growth to the next level.
It’s not a mystery as to why billionaire legend Bill Ackman is back in the game. CP is a wonderful business that will likely lead to more steady gains, even with the pothole of a recession up ahead. The stock trades at 27.5 times trailing price-to-earnings, which seems like a fair price to pay for a powerhouse.
For those seeking more income, Enbridge remains a stellar option. The stock sports a 6.93% dividend yield, with a 16.9 times forward price-to-earnings multiple.
Undoubtedly, Enbridge’s latest quarter saw considerable losses. However, I do think they’re forgivable. More recently, the stock has been choppy amid its legal proceedings with the state of Michigan over the closure of its Line 5 pipeline.
Indeed, regulatory events are a source of great volatility for pipelines. Still, I’d much rather be a buyer of any dips than a seller, given Enbridge’s track record of spoiling investors with dividend hikes through all sorts of environments.