It’s all well and good to talk about so many of the Canadian companies out there to buy on the TSX today. But what about the companies many of us are less sure of?
Today, I’m going to consider one stock I’m not touching with a 10-foot-pole right now, another I would wait and see what happens, and finally, one that investors could buy for a quick rebound.
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Avoid
When it comes to companies that are still shaky for the next few years, I would put railway stocks in that category. Yet for one that I’m avoiding for now, it would be Canadian National Railway (TSX: CNR).
CNR stock put all its resources into purchasing Kansas City Southern over fellow duopoly member Canadian Pacific Kansas City (TSX: CP). As you can tell, CP stock won that battle thanks to a decision from the United States Surface Transportation Board.
But investors were thrilled! The investment was far too costly for CNR stock to make. Yet the question is, now what? The company is back to focusing on being the premiere class one railway. But how will the company continue to expand now?
Wait
Another stock I would avoid for now, at least, is CP stock. The company made a huge investment into KCS. Now, we’re waiting to see how that pays off. And at a time when poor weather is hitting hard, and inflation and interest rates continue to rock the sector, cost savings are key.
Even so, CP stock will now have access to more routes thanks to the deal. It’s now the only railway running throughout North America. And as freight demand continues to rise, with inflation and interest rates dropping in the future, that should only improve.
For now, it’s a bit up in the air as to how CP stock could perform in the near future, which is why there is another I would consider instead.
TFII
Transportation and diversified industrial companies are where to go, and of them all, TFI International (TSX: TFII) could be the best, especially since shares have come down just a bit in the last few months — though only slightly, making it a great opportunity to jump back in.
Concerns around trucking pricing and overall freight demand weighed on the company in the recent past. However, since announcing that TFII stock could separate into two public companies, share prices have come back strong.
So, while trucking pricing may weaken in the near term, there is now another entirely new opportunity for TFII stock investors to get in on. The stock should certainly outperform then, with better pricing also likely to lead to better demand as well.
Bottom line
Transportation will always be needed, and all three of these stocks remain strong options on the TSX today — especially if you’re considering them as long-term purchases. However, for one that will more than likely see growth in the near future rather than a fall, investors should certainly consider TFII stock first.
