It can be tough to know where to start if you’re looking to put your first (or latest) TFSA (Tax-Free Savings Account) contribution to work. Indeed, the stock market can be a choppy beast, especially after a strong bullish run from its lows. With the broader S&P 500 not looking back after an explosive past-year run, investors have the right to be just a tad concerned about overbought positions, extended valuations, and some of the media headlines that have used the word bubble.
Specifically, some of the bears out there may be worried that there’s a bubble brewing in the artificial intelligence (AI) scene, drawing some comparisons to the market’s tech-driven collapse suffered almost 25 years ago. Now, no market selloffs are the same. And though the market rally has been rewarding for the investors who bought the dip in late 2022 or early 2023, I don’t think one should pay too much merit to the bubble calls. Even if there is a bubble in some of the corners of the market (think the electric vehicle, cryptocurrency, or semiconductor scene), you don’t have to put yourself in the hottest parts of this market.
TFSA investors: Stick with proven long-term winners, not the hottest gainers in tech
In fact, if you buy value stocks that are far away from these corners, you may not even notice the market’s nosedive if your TFSA fund is far away from the “blast zone.” I have no idea if a correction or bearish plunge will hit, as it did in 2022.
Regardless, you shouldn’t seek to time the markets or the state of the economy. If you have a great company at an even better price, you can go ahead and buy it. It’s that simple. And if you’re hanging onto shares of a firm that’s doubled in the past year, taking some profits is only prudent. After all, you don’t need to hang onto a stock that has surged above where you think it ought to be.
Without further ado, let’s look at one stock that I view as intriguing for TFSA investors looking to make a move as we head into April.
Waste Connections
Waste Connections (TSX:WCN) is in the business of collecting (and managing) waste produced by those within its operating markets. It’s not a pretty business, but it’s helped investors score some impressive results in recent years. Also, the appreciation has been quite steady compared to the rest of the stock markets. It’s tough to top the degree of predictability and stability of a firm like Waste Connections.
With over 105% in gains over the past five years to go with a low 0.66 beta (less correlation with the TSX), WCN stock ought to be atop the radars of long-term TFSA investors looking to do well without having to ride on the cutting edge of boom-and-bust technology stocks, like those within the semiconductor industry.
At writing, the stock is fresh off a magnificent melt-up, surging more than 30% since October’s lows. Despite the exceptional year-to-date pop, I continue to be a fan of the stock, even at 58 times trailing price to earnings. Yes, it’s a lofty valuation to get behind. However, I would look for a near-term pullback as an opportunity to start accumulating a stock that you’ll probably never want to sell.
