Beginner TFSA (Tax-Free Savings Account) investors should be a buyer of stocks whenever Mr. Market has another one of his fits. Undoubtedly, the stock market can move in mysterious ways. It can move higher on bad economic data, and it can sag on solid economic data.
At the end of the day, it’s a mistake to time your entry into the markets based on the existing slate of risks that’s already on everyone else’s radar. Timing the market is a bad idea that can cause new investors to miss out on big upside moves.
Further, you can rack up the commission fees by trading in and out of stocks based on what you believe is up next for the economy. While you’ll make your broker rich, you’ll probably diminish your wealth-creation potential.
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TFSA Investors: Insist on bargains with wide moats!
I’m a big fan of the buy-and-hold strategy. However, in the age of generative artificial intelligence (AI), you need to stay in the know to avoid hanging onto shares of a firm that could get disrupted. In this piece, we’ll have a closer look at two value stocks that I believe have economic moats which are wide enough to thrive in the age of AI-drive disruption.
Of course, TFSA investors should think about getting some AI exposure to future-proof their portfolios as well. However, at today’s frothy multiples, I’d argue the wide-moat, low-tech plays offer more bang for your buck. And with an economic slowdown likely partially baked in, the following two plays seem like must-buys on weakness.
Quebecor
Quebecor (TSX: QBR.B) is a Quebec-based telecom that’s been under some pressure in recent months. Shares are down around 17% from their 52-week highs of $50 per share and could be in for even lower lows as the telecom industry continues its horrid descent into the abyss. Undoubtedly, high rates bear most of the blame for the pains faced by the industry. Still, I think Quebecor is one of the disruptive firms you need to own at these depressed valuations.
The stock trades at 10.9 times trailing price-to-earnings, with a 4.1% dividend yield. Sure, the yield isn’t as rich as the peer group.
These days, a 7% yield is not uncommon. That said, I find the valuation to be the main attraction to the Quebec-based telecom. Further, I foresee significant growth potential over the next 10 years, as the firm makes moves to become a beefier national wireless provider.
CSX
CSX (NASDAQ: CSX) is an American railway that’s worth the attention of Canadian investors. Sure, we have two very capable railways on this side of the border to invest in. However, I think there’s more value to be had in a name like CSX after its brutal past year of choppy trading. The stock is down nearly 19% from its 2022 all-time high.
At 15.4 times trailing price-to-earnings, CSX stands out as a value option to play the rail space. Recently, the company hired a seasoned industry veteran Mike Cory as its new COO (chief operating officer). I think the move is a big deal that could help (forgive the pun) get CSX back on the right track.
