TFSA investors shouldn’t feel the need to wait for the markets to “bottom” or dust to “settle” before putting cash to work. Sure, there are wonderful options that are free from risk. GICs (Guaranteed Investment Certificates) yield around 4.2% on 12-month issues. Further, various firms are sweetening the pot on savings accounts. With all the bank runs going on in the U.S. regionals while fintech firms look to offer generous rates on deposits, we could see the big banks increasing interest on everyday savings accounts.
Indeed, TINA (there is no alternative) seems to be a thing of the past. Despite this, I still think stocks are the way to go for new TFSA investors willing to commit to 10 years or more. They’re still the best way to grow wealth over extended periods of time. Even with the allure of higher-rate risk-free securities, standing by stocks and buying more at discounted prices could be the best course of action. Of course, you need the stomach. Not everybody has it. The longer your horizon, the stronger your stomach can be as you gain your market “legs” through various rough patches in the market waters.
Sailing through a turbulent and wavy market as a TFSA investor is never easy. But you will get used to it and improve your ability to spot value and opportunity when times head south.
With banks causing waves south of the border again, it’s a good time to give the stocks on your radar a second look. In this piece, we’ll look at two retail names that look too cheap.
Couche-Tard
Alimentation Couche-Tard (TSX:ATD) keeps finding a way to impress. As one of my favourite Canadian companies, Couche-Tard ought to be on TFSA investors’ radars as shares slip off all-time highs.
The company not only has to an impressive and predictable earnings growth trajectory, it has a magnificent balance sheet that’s almost bullet-proof. Management is best-in-class, in my opinion. They’re not the type to get excited when times are good and gloomy when things turn. Instead, they position themselves in a way to maximize value for shareholders over the course of years or decades.
When it comes to your TFSA, you should insist on best-in-class stewards. That’s what you’ll get from Couche and right now, the stock’s going for just north of 17.3 times trailing price-to-earnings.
Aritzia
Aritzia (TSX:ATZ) is a women’s clothing retailer that’s exploded on the scene, posting 230% in returns over a five-year timespan. That’s including the pandemic crash and all the volatility in between. Today, shares are in a bit of a bearish slump, off around 28% from highs. Recession could weigh on discretionary consumer budgets.
Still, I think Aritizia’s brand is so compelling that it could offset headwinds as it looks to take share away from other fashionable firms. As a $4.8 billion mid-cap with a mere 26.4 times trailing price-to-earnings multiple, I’d argue Aritzia is very compelling on this dip for those willing to invest for the next 10 years. I think it could be a generational growth firm that helps power a TFSA higher over the years! Like Couche, Aritzia has stellar managers w are all about profitable growth.
