TFSA (Tax-Free Savings Account) investors should take advantage of recent market volatility and pick up a wonderful business at a fair to reasonable price. Indeed, we’ve seen glimmers of bullishness in recent weeks. And though it’s impossible to tell what’s in store for 2024 (even a good year could bring forth sub-par investment returns), I think TFSA investors should look to maximize their time stocks rather than trying to get in at a trough with the intention of getting out at the peak.
Sure, it’s a wise idea to take profits when a stock exceeds what you think is a reasonable estimate of its intrinsic value. However, truly wonderful firms may be worth hanging onto for years at a time, especially if their fundamentals improve over time. Indeed, the business world is moving fast. And the firms that can adapt and take market share may very well be worth a heftier price of admission!
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TFSA investors: Commodity plays look to be on sale!
In this piece, we’ll check out two TSX commodity Stocks that look like intriguing market bargains. Although the prices of commodities — from oil to precious metals and potash — are pretty much impossible to predict, I view them as a terrific portfolio diversifier for long-term TFSA investors.
Further, if you can pick up shares in a well-run, efficient commodity miner, you may be able to score better results than buying futures in underlying commodities themselves. As always, the added leverage of investing in companies (over physical commodities) entails more risk. But the higher reward potential, I believe, makes it worth it if you’re a TFSA investor who’s playing the long game.
Without further ado, let’s get into the two names.
Nutrien
Nutrien (TSX: NTR) is an agricultural commodity producer that’s seen its shares have quite the fall from grace, tanking its 2021 peak of $135 and change to $73 and change trough hit just over a week ago. At writing, the stock has shed over 41% of its value. All the while, the dividend yield has swelled to the 3.82% mark.
Though fertilizer prices are unlikely to rocket back to new heights anytime soon, I think longer-term investors should be buyers of the dip, given the secular trends that could bring forth robust demand for potash and other agricultural commodities.
Indeed, the world population is growing, and crop yields will need to improve to feed more mouths. With solid NPK (nitrogen, phosphorus, and potassium) assets, Nutrien stock is an overlooked firm that will live to see better days again.
Barrick Gold
Up next, we have gold producer Barrick Gold (TSX: ABX), which has seen better days. The stock is off more than 45% from its 2020 peak. The recent slip in gold prices is discouraging, but the reaction in the gold miners, I believe, is overdone.
As risk comes off the table and rates cool, demand for such safe-haven assets like gold and silver could temper. Either way, Barrick is one of the best ways to bet on gold, which continues to get a great hedge against black swan events. The stock yields 2.53% and is cheap relative to the assets you’ll get.
More recently, the firm upped its stake in Hercules Silver by $23.4 million. It’s an intriguing move, to say the least.
