It’s been a rough past few years, with the global pandemic (and 2020 stock market crash), an unforgiving 2022 tech selloff, soaring inflation, and painful rate hikes. Despite the wild ride, I still think TFSA (Tax-Free Savings Account) investors have plenty of reasons to stay the course. If you didn’t hesitate in 2020, when the coronavirus evolved into a pandemic, you likely stuck around for the relief rally that quickly followed the plunge. And if you bought the dip, your recovery may have been even faster!
Indeed, the 2022 bear market in U.S. stocks was another painful time for new investors. Again, though, it rewarded the investors willing to step in at a time when it seemed silly to do so. Stocks don’t always go down, and they don’t always go up. They will likely always act in unpredictable ways, making market timing a pretty big waste of time, unless you’re a trader that’s able to predict the future!
Nobody knows what the future holds for the broader markets, as artificial intelligence technologies hit centre stage. Undoubtedly, it could be as turbulent as the first three years of the 2020s. And if that’s the case, TFSA investors had better be prepared to continue staying on their toes, so they’re able to roll with even more punches.
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TFSA investors: Stay focused on your long-term retirement goals
Regardless of how good or bad things get, TFSA investors should always stay the course and continue setting their sights on that retirement date. Whether you plan to retire in 10 years from now, or 30, you should stay focused on the long-term horizon, so your retirement dreams don’t die.
Of course, market setbacks and corrections can always delay your expected retirement date. But with prudent stock picks and an insistence on value, you can improve your odds and perhaps retire a tad earlier than expected.
In this piece, we’ll look at two promising stocks that may be worth buying and holding in your TFSA for decades.
CP Rail
Shares of Canadian Pacific Kansas City (TSX:CP) fell over 1% on Wednesday, as the broader market surged higher. The company, which recently merged with Kansas City Southern, issued guidance for the year and the long run. The targets failed to impress analysts. For the year, CP Rail expects to pull in an adjusted $3.77 per share.
For 2024-28, CP sees the compound annual growth rate for sales coming in the high single digits. Undoubtedly, many CP bulls likely thought the merger would deliver stronger top-line growth numbers, perhaps in the low double digits. Though the financial guidance was not much to write home about, I still think CP stock is worth a premium to the peer group.
At 26.19 times trailing price to earnings, CP looks like a solid long-term pick, as the firm looks to move forward with its already impressive rail network.
Northland Power
Northland Power (TSX:NPI) stock is a dividend juggernaut to play the rise of renewable energy. The stock yields an attractive 4.41%, with a mere 9.94 times trailing price-to-earnings multiple. The stock seems to be a falling knife right now, with shares down around 47% from their 2021 highs of around $50 per share.
Nobody knows when the pain will end for the $6.86 billion power producer. Regardless, I think estimates are a tad too muted, even if earnings are destined to retreat from here. Shares go for more than 21 times forward price to earnings.
After recent asset sales, Northland has more financial wiggle room to fund its growth projects. For now, though, investor confidence seems low, with expectations that may not be so difficult to surpass, even given macro headwinds.
