Tax-Free Savings Account (TFSA) investors have been through more than a year of bearish moves and rate-hike worries. After a prominent bank failure south of the border, a wave of fear has caused some investors to hit the sell button. A hawkish Federal Reserve chairman and the promise of more rate hikes to fight inflation are not helping build a bullish scenario. Indeed, stock market moves have been quite tightly tied to moves made by the bond market.
With U.S. banks feeling the pressure, the odds of a 50-basis-point rate hikes have fallen drastically. Heck, a 25-basis-point hike may not even be in the cards come decision time. This goes to show how fast things can change and why it’s never a good idea to time markets.
Looking ahead, TFSA investors should take advantage of market turmoil to bag potential bargains. It’s never easy to be bullish while most others around you are in “doom-and-gloom” mode. Regardless, I think those willing to endure short-term pain can improve their odds of generating slightly better longer-term gains.
In this piece, we’ll consider two TSX stocks that may be worth stashing away for 20 years or more.
Aritizia (TSX:ATZ) is a fashion retailer that could become Canada’s next big growth darling. The company is in expansion mode in the U.S. market — a move that could help power earnings growth for many years, if not decades, to come. Indeed, Americans may not be as familiar with the brand, but as the firm continues to do its best to build brand affinity, I think Aritzia is a worthy growth name that’s capable of taking a lot of share in the mid-range fashion scene.
There’s a recession ahead, and that’s weighed on shares of Aritzia. Longer term, though, I think the growth story is too tough to pass up, even if there’s another few quarters of recession-hit results in the cards. Thus far, Aritzia hasn’t felt as much of a pinch as you’d expect as consumers brace for a downturn.
The stock trades at just shy of 25 times trailing price to earnings. That’s too low for such a wonderful business with a world of growth prospects.
Canadian Tire (TSX:CTC.A) is a less-exciting retailer that’s also felt a lot of pressure amid the rate-tightening cycle. A recession seems unavoidable, and that’s really bad news for discretionary firms that have come such a long way since the pandemic lockdown days. Over time, I think Canadian Tire will get stronger, as it looks to exclusive brands to bring more Canadians to its stores, online and offline.
At 9.5 times trailing price to earnings, Canadian Tire stock is a value play with a compelling 4.1% dividend yield — close to the highest it’s been in years.
Indeed, it’ll be tough sledding for Canada’s iconic retailer as retail, and the financial business feel the winds of recession. But if there’s any firm that can take a shot and move on, it’s Canadian Tire. It navigated through a pandemic, and it can move through another recession.