TFSA Investors: 1 TSX Stock to Battle “Sticky” Inflation

Loblaw (TSX:L) stock is a great value play for a world that could see lingering inflation.

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TFSA (Tax-Free Savings Account) investors who are in it for the long term should stop trying to time the market. It did not take long for pessimism, skepticism, and bearishness to turn into hope, bullishness, and excitement. Undoubtedly, rates are still high, and the Bank of Canada could keep hiking further. That said, investor sentiment is still upbeat, and despite the “bubble” calls of some, stocks still seem to be a great value on the whole.

Indeed, 2023’s hot run made up for last year’s slump. That said, you need to be careful where to put new money to work, as the hottest high-flyers may naturally be most vulnerable to a near-term pullback. Indeed, momentum can turn on a dime. Falling knives can ricochet quickly, as too can high-flyers experiencing a crash landing.

TFSA investors: Keeping it simple

The key for TFSA investors is to stay with what you know. Keep it simple, and don’t chase stocks just because a friend of yours has made big money on a high-flying AI name over the course of a few weeks. Arguably, the hardest thing for new TFSA investors is to stay disciplined and resist the pull of FOMO (fear of missing out).

The only thing that’s as painful as losing money in markets is probably being caught on the sidelines as others around you make money! In any case, TFSA investors need not fret. It’s a waste of effort to go through all the “shoulda, woulda, couldas.”

Instead, focus on moving forward. Look to where value is today, so that you’ll be able to make money in the next year, the next five years, and the next 25 years. At the end of the day, it’s the long-term horizon that will make all the difference for your TFSA growth fund!

Inflation is coming down. But the battle isn’t over yet!

These days, inflation is coming back down to Earth, at least in Canada. However, we still hear the term “sticky” to describe inflation. Indeed, the latest Canadian inflation number (2.8% for June) is a sign of progress. But the battle is not yet over. And inflation’s pressure has not been spread evenly across goods. Go down to the local grocery store, and you’ll still be in for sticker shock.

Why? Various baskets of goods are still running hot, most notably food. And there’s a good chance that it may be far harder to pull inflation from around 3% to 2% from here. Though the inflation headline isn’t as horrid, it’s still important to remember that it’s still on the high side. And it’s only prudent as a TFSA investor to find ways to make a real return (after inflation) while minimizing risks.

Loblaw stock: Shelter from lingering inflation?

At this juncture, Loblaw (TSX:L) is one of the more intriguing companies in the defensive space right now. It’s a grocer that’s had little issue with passing on higher prices to consumers. The stock enjoyed a huge run in 2021, but has since stalled out.

As shares go range bound, I do think TFSA investors may wish to punch their ticket before the next leg higher. Indeed, nobody knows how “sticky” inflation will be from here. Yes, we’ve come a long way since 2021. That said, another few years of above-average inflation is still possible. And sound investments like Loblaw can help you overcome a period of prolonged inflationary pressures.

At the end of the day, Loblaw is a top-tier grocer with one of the best value propositions. In that regard, consumers are likely to keep shopping at Loblaw as economic pressures and lingering food inflation weighs. At 21 times trailing price-to-earnings, L stock is also not too pricy.

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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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