With a potential Santa Claus rally (the final five trading days of the year) potentially in full swing, investors may be wondering if now is a good time to buy before the new year arrives. Undoubtedly, it’ll be tough for the stock market (at least the S&P 500 and Nasdaq 100) to top the returns clocked in for 2023.
As the artificial intelligence boom continues to excite the masses, stocks could certainly have room to run from here, even if the “easy money” has already been made by the investors who braved the great tech wreckage of 2022.
Just because 2023 was a great year for stocks doesn’t mean 2024 will be a bad one. Indeed, many economists seemed to have it wrong in 2023. We were supposed to be dealt a recession and a continuation of 2022’s bearish conditions.
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2024 could prove better than expected (again)
The recession seems to have been delayed (again), and with somewhat better feelings about what to expect from 2024 (a padded landing for the economy alongside lower rates), it certainly seems like a good time to give stocks some love again, even as rates of risk-free assets continue to look historically attractive (many Guaranteed Investment Certificates still offer rates over 5%).
Going into 2024, I think little-known and lesser-loved Canadian stocks could be primed for outperformance relative to the averages and the mega-cap tech leaders that did most of the lifting for markets in 2023. And in this piece, we’ll have a brief look at two that I’d be willing to pursue amid the Santa rally.
TFI International
TFI International (TSX:TFII) is a trucker that skyrocketed 7.85% last Friday, thanks in part to the good news of the firm’s intent to acquire Daseke. The acquisition works out to have an enterprise value of close to US$1.1 billion. And though only time will tell how TFI will fare post-acquisition, I think it’s safe to say that most investors are willing to give the Canadian trucker the benefit of the doubt. At the end of the day, TFI is a trucker that’s proven it can keep on truckin’ through even challenging economic times.
If Canada avoids a hard landing for the economy (rate cuts could be in the cards for 2024), I expect TFII stock could be in a spot to make new highs. For now, shares trade at 21.88 times trailing price to earnings (P/E), which isn’t excessive if you’re bullish on 2024. The 1.22% dividend yield is also a nice addition for fans of the $15 billion logistics titan.
Cargojet
Cargojet (TSX:CJT) is one of the Canadian high flyers (sorry for the pun) that lost its way since peaking in the back half of 2020. Shares lost nearly two-thirds of their value from peak to trough. More recently, though, CJT stock has shown signs of progress, rising around 45% from its October 2023 lows.
Could this be a sign of a turnaround? I think it could be. As the economy heals and shipping demand heats up again, Cargojet’s services will be in higher demand again. For now, the stock looks modestly priced at 26.4 times trailing price to earnings — not a high price to pay for a firm still capable of impressive growth if you’re looking to play an expanding economy.
