The Canadian stock market is continuing to scale new heights in 2024 as recent interest rate cuts in Canada and growing hopes for rate cuts in the United States are boosting investors’ confidence. As interest rate cuts are likely to stimulate economic growth and consumer spending, many sectors may benefit from increased liquidity and lower financing costs. This is one of the key reasons why it could be the right time for long-term investors to consider adding fundamentally strong Canadian stocks to their portfolios.
If you have $5,000 to invest and are looking for opportunities that may benefit from the ongoing market rally, here are two TSX-listed stocks to consider.
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Magna International stock
Magna International (TSX: MG) is the first stock you may want to consider right now. This Aurora-headquartered automotive supplier and mobility company currently has a market cap of $16.4 billion as its stock trades at $57.51 per share after declining by 27% so far in 2024. At this market price, this stock also offers a decent 4.5% annualized dividend yield.
The recent declines in Magna stock could primarily be attributed to a weakness in its latest quarterly financial results. In the quarter ended in June 2024, the company’s total revenue remained nearly flat on a YoY (year-over-year) basis at US$11 billion. However, lower assembly volumes and higher net warranty costs drove its adjusted quarterly earnings down by 10% from a year ago to US$1.35 per share. During the quarter, Magna returned US$134 million to shareholders through dividends as it remains committed to shareholder returns.
Despite short-term challenges due mainly to slowing global economic growth, Magna’s continued focus on operational efficiency and emerging automotive industry trends, including electrification and autonomous driving technologies, brightens its long-term growth outlook, which should help its share prices recover fast. In addition, lower interest rates are likely to reduce borrowing costs for its capital-intensive automotive production operations and boost its profitability.
Great-West Lifeco stock
Great-West Lifeco (TSX: GWO) is another impressive stock you might consider for your investment. Headquartered in Winnipeg, this global financial services giant currently has a market cap of $40.3 billion as its stock trades at $43.59 per share after rising by around 11% over the last two months. Just like Magna, Great-West also rewards its investors with quarterly dividends and its annualized dividend yield currently stands at 5.1%.
Despite recent macroeconomic challenges, Great-West’s adjusted earnings jumped by 19.8% YoY over the last 12 months (ended in June) to $4.26 per share. In the latest quarter, the company’s adjusted net profit margin also expanded to 11.8% from 10.4% a year ago. Although credit-related impacts affected its U.S. operations in the June quarter, it still managed to report record base earnings for the quarter due partly to higher fee income.
Moreover, Great-West Lifeco’s strong presence in European and U.S. markets, its diversified portfolio, and its strong balance sheet make it an excellent investment for long-term investors seeking both stability and steady income.
