While they say buying the dip and selling the rally is the way to earn returns, you can’t always time the market. And there is a possibility that the stock may dip further even after you buy the dip. It all depends on the market conditions and the company’s fundamentals. Here are five Canadian stocks you could consider buying and holding forever in your Tax-Free Savings Account (TFSA) for wealth creation.
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Five stocks to buy and hold forever
In long-term investing, you should look for companies that will be relevant even after a decade. Their product/service should have demand, and the management should have the potential to capitalize on the opportunity.
Descartes Systems
Among the many supply chain management software, Descartes Systems (TSX: DSG) has stronger fundamentals. The company capitalizes on the supply chain opportunity efficiently with its range of solutions, from transportation to routing to regulatory and customs compliance. It grows steadily both organically and through acquisition. Its revenue and earnings-per-share growth has been in the mid-teens percentage. There are years of single-digit revenue growth when the global economy sees a slowdown. However, the stock has the potential to recover with the economy
Descartes stock is properly valued at 45 times its forward earnings per share and 14 times its sales per share. So, you can’t say the stock is in a dip. But you may lose on the future growth from economic recovery, e-commerce boom, and trade growth if you keep waiting for the dip.
Canadian Tire stock
Canadian Tire (TSX: CTC.A) is a range-bound dividend stock you can buy when it trades near the lower range. This retailer has been in business for over 100 years and has evolved with time. From selling automotive components to sports, seasonal goods, houseware and hardware to petroleum at gas stations, the retailer has multiple sources of revenue. It has also adopted omnichannel technology to stay relevant and capture the new-age customer.
Canadian Tire is capitalizing on its retail base to provide financial services like credit cards to its customers and acquire retail stores through CT REIT. The stock has survived retail seasonality and economic downturns while giving stable dividends and even growing them.
The stock is trading closer to its 52-week low, creating an opportunity to lock in a 5% yield and capital appreciation in economic recovery.
TC Energy stock
Another range-bound stock, but with a higher yield of over 7%, is TC Energy (TSX: TRP). The pipeline infrastructure will continue to supply gas for decades and generate regular cash flows. You can benefit from the 3-5% dividend growth as the company spins off its oil pipeline business, giving the gas pipeline business the flexibility to grow. The stock is trading at the midpoint of its 52-week low and high.
It can help you diversify your portfolio to include the energy sector and hedge your portfolio against inflation when energy prices rise.
goeasy
The sub-prime lender goeasy (TSX: GSY) is a stock worth holding for the long term. Its business will remain relevant for years as it lends to people who cannot secure loans from banks and helps them improve their credit scores. Over the years, it has perfected its lending model and credit score screening, reducing defaults.
goeasy has gradually increased its consumer loan portfolio to $4 billion and plans to grow it to $6 billion by 2026. A bigger portfolio means more interest and loan-processing fees. While it also means higher credit risk, the company aims to keep it under check. This stock is trading closer to its 52-week high. But grabbing it now can help you benefit from its future growth.
Technology ETF
Supporting your TFSA with iShares S&P/TSX Capped Information Technology Index ETF (TSX: XIT) can help you reduce the risk of individual stocks. The fast-growing tech sector has many secular trends of e-commerce, artificial intelligence, cloud computing, autonomous cars, the Internet of things and more to come. The XIT ETF has already invested in all these trends captured by Canadian tech stocks. With most tech stocks trading above $100 per share, you will need large capital to get exposure to all trends. Instead, you can buy units of the XIT ETF and enjoy the sector growth.
