Historically riddled with volatility, September is never a month many investors are excited about. Besides the sadness that summer has ended, the stock market typically becomes an ugly place for investors to allocate their capital. However, September’s reputation should not be the only reason to consider staying on the sidelines with your money tucked away.
Canada’s stock market has performed commendably in the last month. Between August 7 and September 9, the S&P/TSX Composite Index is up by 5.24%. So far, it is too early to say whether the typical downward swing in September is on the cards, especially since the market has rallied from a nosedive in July and August.
While it does not mean diving head first into the first attractive stock you see, there is no harm in being cautiously optimistic as a long-term investor. Remember, real success as a stock market investor is in the long run. Letting short-term volatility dictate your investment decisions is not the Foolish way to go.
With that, today, we will discuss two TSX stocks that can be excellent long-term investments to consider adding to your self-directed investment portfolio.
Canadian National Railway
Canadian National Railway (TSX:CNR) is a $100.12 billion market cap railway giant that has been struggling for months on the stock market amid various delays and union strikes. Plenty needs to be done to address concerns regarding railroad halts. Despite the dip in its share prices in recent months, CNR stock can be considered a solid long-term holding for investors.
The largely consolidated industry is vital to the North American economy, and CNR is one of the biggest railroad operators. It has a wide enough economic moat to traverse the challenges it faces right now. CNR stock might not be looking at any explosive returns after its ongoing slump in share prices.
However, the new interest rate cuts might provide some relief to the railway operator and position it for a solid recovery over the next decade.
While investors wait for a turnaround in share prices over the long run, they can enjoy a 2.13% dividend yield to smooth things over in terms of returns.
Fairfax Financial Holdings
Fairfax Financial Holdings (TSX:FFH) is a stock that has delivered a solid performance over the last couple of years. As of this writing, the $37.82 billion market cap financial holding company stock trades for $1,611 per share. Between September 9, 2022, and September 9, 2024, its share prices are up by 146.40%.
The financial firm has a solid leader in Prem Watsa, its chief executive officer, who has led the company out of a slump. Despite its share prices appreciating significantly, FFH stock looks undervalued, with a trailing price-to-earnings ratio of 7.28. Besides being undervalued, Fairfax Financial has been busy with lucrative acquisitions that can drive more growth in the coming years.
Even after substantial gains in the last two years, FFH stock looks poised to deliver more upside in the coming years.
Foolish takeaway
Besides being good long-term picks, investing in stocks that weather near-term market volatility better than others is always reassuring. To this end, blue-chip stocks like Canadian National Railway and Fairfax Financial Holdings can be good investments to consider.
Even with its recent problems, CNR stock, in particular, might be more attractive than some might consider due to its reputation for being a reliable long-term investment. If I were to pick between the two, CNR stock might be a good buy for capturing capital gains with its recovery to better share prices.
