There is no guaranteed method of choosing the stocks that will create the highest long-term returns for Canadian investors. And that becomes even less certain when you’re looking at a time frame of just a year or two.
That being said, there are ways to identify some great long-term winners, and that’s by looking at deep value. Instead of trying to find the next big growth stock, sinking into the WallStreetBets subreddit to find what might explode, instead, it’s better to find the tried-and-true winners.
That’s why we’re going to look at three Canadian stocks on the TSX today that could provide even more winnings for investors.
TFI stock is spinning out
TFI International (TSX: TFII) will provide investors with its fourth-quarter results this February, and investors will likely be interested in one thing: the spinoff. But that doesn’t mean investors should wait around until earnings come out.
TFII stock has been outperforming the TSX today since the market reached a trough back on Oct. 27, 2023. Since then, shares have been up 21%! And this is the highest gain since before the pandemic.
The pandemic is key here, because the $15.58 billion trucking company saw a huge increase in usage during this time. E-commerce grew, and trucking got these products to where they needed to be. Yet, of course, that all reversed when interest rates and inflation rose.
Now, TFII stock looks to be undervalued, offering an opportunity from several avenues. Of course, first, there is the recovery in the market, seeing a rise in trucking usage. However, outperformance is also driven by other areas as well. This includes a US$1.1 billion acquisition that will see the expansion of its fleet, with less need to upgrade its current fleet as well.
And then, there is the future spinoff opportunity. TFII stock is spinning out into two companies, focusing on trucking on the one hand and logistics on the other. This will allow for even more growth in the future, with the spinoff likely within the next two years.
Meanwhile, TFII stock remains a deep value opportunity for investors on the TSX today. TFII stock trades at just 1.53 times sales, with just 77% of equity needed to pay off all debts. Add on a 2.15% dividend yield that’s higher than its five-year average of 1.5%, and there are many reasons to consider the stock right now.
Tricon is being bought
There are a lot of reasons to get into the real estate sector right now if you’re looking for deep value. But what if you can get that deep value without the risk? That’s why investors may also want to consider Tricon Residential (TSX: TCN) on the TSX today as well.
Tricon stock announced it would be purchased in a US$3.5 billion friendly takeover by New York-based Blackstone (NYSE: BX). This will lead investors to try to reach that US$11.25 price, or about $15.15, to match the deal offers. It currently trades at $14.83 as of writing.
It’s a great deal on both sides. Blackstone is getting a deal on share price in this higher interest rate environment, with continued volatility in the sector as well. The price, however, still reflects fair value — especially as Tricon stock has been trying to add value that could take years to reach full value for shareholders.
So, right now, investors can get in before the buy and see value rise quickly through returns. Meanwhile, there is a 2.1% dividend yield to also consider. All in all, Tricon stock is another strong buy offering deep value on the TSX today.
