A new year means Canadian investors should at least start thinking about where to put their latest TFSA (Tax-Free Savings Account) contribution to work. Indeed, stocks have really heated up in recent months, but the rally does not necessarily have to end up in some sort of painful wintertime plunge. Either way, this piece will check out a handful of consumer stocks that I view as quite undervalued with dividend yields that are more than worth getting behind this January.
Indeed, the names may have catalysts in the cards over the coming quarters, but I view them as best held over the next four to five years. With solid long-term game plans, I view them as true long-term holdings that investors may wish to pick up and forget about for the next couple of years.
Without further ado, here are three consumer names worth buying with a half portion of your latest TFSA contribution!
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Canadian Tire
Canadian Tire (TSX: CTC.A) isn’t just the legendary retailer that’s likely within a short drive from most Canadians; it’s also the firm behind legendary sports retailer SportChek and work clothing retailer Mark’s.
The company has a solid foundation of brands and an improving loyalty program via Triangle. As smart as management has been in recent years, the stock has struggled to break out of its lengthy bear market. As we march into a new year, perhaps improving consumer sentiment could help drive shares of CTC.A back above the $200 level.
In the meantime, investors will collect a fat 4.58% dividend yield at a fairly reasonable multiple (13.4 times trailing price to earnings (P/E)). If you’re looking for a cheap, consumer-friendly name to pick up for 2025, Canadian Tire is one of the better picks out there.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX: ATD) is a convenience retailer that’s in another one of its nasty stumbles, recently slipping 2.2% on Monday’s session on seemingly no bad news. For 2025, ATD stock is down around 3%, making it a perfect pick-up if you’re looking for more of a defensive growth play with an overlooked catalyst in the successful closing of the 7-Eleven deal. For now, it’s uncertain if Couche-Tard can get the deal done.
Either way, shares are way too cheap at 19.8 times trailing P/E, given the long-term earnings growth trajectory ahead. With a nice 0.9% dividend yield and upside should consumers start spending again, I wouldn’t sleep on Couche-Tard at these levels. It’s a sleeping giant that may finally wake up!
Empire Company
Finally, we have Empire Company (TSX: EMP.A), a grocery retailer firm that’s in the midst of a strong rally, now up over 25% in the past year. Indeed, the Canadian grocery scene has been quite solid in recent years, and as Empire looks to finally catch up with its rivals by breaking out, I’d not overlook the 1.9%-yielder.
As the grocer sticks with full-service stores, there could be ample growth should consumers finally return from rival discount retailers. The stock looks too cheap at 16.1 times trailing P/E. The low 0.48 beta could also make for a smoother ride if 2025 is a correction year!
