TFSA: 5 Canadian Stocks to Buy and Hold Forever

These five Canadian stocks are the perfect choices for your TFSA, with a rebounding market and lower interest rates leading to a rise.

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If there was ever an investment trope that deserved to be used right now, it’s to “buy low, sell high.” That’s the goal, isn’t it? And right now there are so many Canadian stocks trading low. This offers an immense opportunity for Canadian investors using their Tax-Free Savings Account (TFSA).

So today, we’re going to focus on five Canadian stocks offering this massive opportunity. How do we know? Because each trades within a sector due for a soft landing in 2024. And that’s the aerospace and transportation industries. To be quite clear, the focus is on freight, whether through trucking or aviation. This sector in particular will likely see a huge increase, especially as consumers look to start buying in a lower interest rate environment.

Best in trucking

The best option for stocks in the trucking sector is TFI International (TSX:TFII). While the $15.6-billion stock has done well in the last year, bolstering its bottom line in the process, there is far more room to grow.

Shares have outperformed the market since October 2023, with the recent performance driven in part by the company’s announcement in December to separate into two publicly traded businesses. This would now include a trucking business, and a logistics business after a US$1.1 billion acquisition.

The freight market is already experiencing a rebound, even with macro uncertainty. Yet TFI stock continues to demonstrate its ability to create strong value. Not just through acquisitions, but through this recent spin off. While the spin off could be two years out, this does offer a huge opportunity for long-term investors seeking growth.

Yet another strong choice in trucking could also be Mullen Group (TSX:MTL). The $1.3-billion trucking company has underperformed the market, compared to TFI Stock. However, the stock looks to be trading at a significant discount among these Canadian stocks. It has a slower growth profile compared to TFI stock, but has proven its resilience.

Mullen stock operates a well-diversified portfolio of businesses, both through its operations as well as locations. It now operates with a high dividend yield of about 5% as of writing, and just 8.6 times earnings for those seeking a deal in this sector while it trades at a trough.

Best in airlines

When it comes to shipping through the air, there are two that are due for a rise. First there’s Cargojet (TSX:CJT), which continues to offer a huge deal among Canadian stocks. The $2.1-billion company has outperformed the TSX since the market started to recover in October. And while there might be some near-term volatility, there is strong upside risk for those willing to wait it out.

Cargojet stock had a tough year in 2023, with growth stalling from its domestic and international customers. Yet this year, that growth ramped up once more, especially with its DHL contract ramping up as well. What’s more, Cargojet stock is set to create even more free cash flow (FCF), with potential asset sales later this year. This would certainly add to its rising share price.

But it’s not the only growth story among airlines. As consumers look to ship more products, and indeed travel more, Exchange Income (TSX:EIF) should be a sector outperformer as well. The $2.1-billion aerospace and aviation manufacturer offers niche exposure to northern communities. This is key, given that there are high entry barriers, low competition for the area, and government support to reach these communities. So with a diverse portfolio, a 5.73% dividend yield, and low payout ratio, this could be a strong winner in 2024.

Best in railway

Finally, we have Canadian National Railway (TSX:CNR) as the top choice among railways. That’s mainly because while it shares a duopoly of railways in Canada, it isn’t drowning in debt. The company should see short-tern issues with weather and lower demand for products hampering earnings. However, the rest of 2024 should see huge improvements.

The $109-billion company is likely to outperform other railways, and continues to engage in strong buybacks. As traffic improves in 2024, there should be a significant earnings per share (EPS) rebound. While it might take two quarters to see large improvements in share price, it could certainly be worth the wait.

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 Amy Legate-Wolfe has positions in Cargojet. The Motley Fool has positions in and recommends Cargojet and Mullen Group. The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy.

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