TFSA Investors: 2 Great Stocks to Buy in July and Hold Forever

Alimentation Couche-Tard (TSX:ATD) and another great stock are fit to buy in July.

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When it comes to stocks to keep tucked away in your TFSA (Tax-Free Savings Account) portfolio for decades, you should look to some of the cheap, wide-moat firms that have the means to do relatively decent, regardless of which direction the rest of the market is destined for. Indeed, it can be rather tricky to find a stock that you’d be willing to hold for decades. They do exist, but you need to ensure you pick up shares at a price that’s on the low side.

In this piece, we’ll consider two great stocks that look undervalued this July. And they may be worth hanging onto for the long haul, especially if you’ve yet to deploy that latest TFSA contribution in the financial markets. So, without further ado, let’s check in with a top TFSA-worthy stock pick if you seek a name to help you build wealth through the ages.

Alimentation Couche-Tard

Alimentation Couche-Tard (TSX:ATD) has seen volatility swing higher of late. Even as the latest round of quarterly earnings came up a tad shy of expectations, the firm still looks in great shape to keep growing its top and bottom lines. The same strategy that helped Couche-Tard surge more than 427% in the past 10 years is on the table.

With Chief Executive Officer Brian Hannasch gives up his spot to Alex Miller, a man who served as chief operating officer, come September, investors may be a bit startled over what the implications mean. Big C-suite changes can be a source of anxiety and uncertainty. However, I don’t think there’s anything to hit the panic button over, especially given Hannasch is retiring and not leaving the firm in a dire state. Arguably, Couche-Tard is in the best shape it’s ever been, flush with cash to take advantage of merger and acquisition opportunities and a game plan to keep earnings rolling higher.

As the firm experiments with new merchandising strategies, while exploring potential acquisition targets, I see drivers helping ATD stock break out of its recent correction. The stock trades at just shy of 20 times trailing price to earnings (P/E) at writing. It’s not a high price to pay for a top grower. Perhaps ATD stock was designed for a long-term-focused TFSA.

CN Rail

CN Rail (TSX:CNR) is a railway firm that’s also been correcting lately, with shares of CNR now down just shy of 11% from all-time highs. Indeed, this seems more like another typical correction than a sign that CN has lost its competitive edge to a rival. If anything, CN Rail has a wider moat with its impressive network. Also, the stock is a bargain at just 19.1 times trailing P/E. The 2.1% dividend yield is also among the most generous in the industry.

All considered, CNR is a fine addition to any TFSA, especially while it’s still down and out. Moving ahead, perhaps CN Rail could be in a spot to improve its operating ratio. Of late, margins have not been too great. That said, there’s so much room for the firm to improve. And I think it will over the coming years.

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 Joey Frenette has positions in Alimentation Couche-Tard and Canadian National Railway. The Motley Fool has positions in and recommends Alimentation Couche-Tard. The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy.

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