TSX stocks have had a strong start in 2024, but many stocks have taken a hit lately. Several great quality stocks have fallen back to earth, which means now might be a good time to buy the dip.
When you are a long-term investor, the best time to buy stocks is often when you have cash. But who doesn’t want to add to stocks when their valuations look attractive? If you want some quality TSX stocks on a pullback, here are four to consider adding to right now.
A TSX transport stock for the decades
Canadian National Railway (TSX: CNR) recently pulled back after it announced its first quarter results. The global freight environment has been extremely challenging. Volumes have fallen, and that impacted CNR’s results.
The company has been in a turnaround the past few years. It has focused on efficiency and velocity. Despite a weak quarter, it still upheld its guidance to grow earnings per share by 10% in 2024.
CNR has one of the best balance sheets in the rail industry. That provides ample flexibility if the economy continues to weaken further. Investors can also be opportunistic and buy back stock if its valuation declines. CN is a long-term stock. It is a great bet for long-term investors.
A great long-term stock facing near-term headwinds
TFI International (TSX: TFII) is another transport stock that has faced some headwinds. It came out with disappointing earnings in the first quarter. Its stock is down 17% in the month.
Transport volumes across North America are down. The slowdown is hitting almost every freight provider. TFI’s recent results were largely in line with expectations, but the market was surprised at how much the macro environment had deteriorated.
The good news is that TFI has many levers to pull. It is working to improve its network, lower costs, and streamline operations. It has a solid balance sheet and a great record of buying smaller transport businesses opportunistically.
If this TSX stock pulls back more, it will likely buy back stock and continue to accrete long-term strong returns for shareholders.
An insurance business with a large growth opportunity
Trisura Group (TSX: TSU) has a history of delivering very strong returns for shareholders. However, last year it made some mistakes and the stock pulled back substantially.
Despite this, Trisura looks set up for a strong recovery in 2024. Trisura is a speciality insurance provider in Canada. It is also growing its specialty business in the U.S. where it already has a strong insurance fronting business.
This is a more complicated TSX stock to understand. However, over long periods, management has been very successful at growing this business. It has a large runway ahead. The stock trades at a large discount to peers and an attractive valuation (16 times earnings) today.
A top TSX software stock
Topicus.com (TSXV: TOI) stock has likewise recently been pulling back after a strong start to the year. Topicus.com is a spin-out from Constellation Software. The company is executing a similar software acquisition strategy as Constellation, but it has a specific focus on Europe.
While acquisitions have recently slowed, it has been delivering great organic growth. Topicus is a resilient business because much of its software is niche and very essential to its customers.
If the economy weakens, Topicus is likely to swipe up quality software businesses at a discount. I would be a serious buyer if this stock declined by a larger margin.
