2024 was a great year for Canadian stocks, but 2025 looks to be a little more uncertain. With a new year upon us, it is always a good idea to look at your investment strategy and see how you can improve.
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Every year, take some time to evaluate your investment strategy
For me, it is making fewer investment decisions. This means spending a little extra time thinking about the investments I want to hold for the long term.
I want to own the best quality businesses possible. Often, the best thing I can do is to sit on my hands and let those businesses generate the compounded returns for me.
I expect 2025 could have a lot more ups and downs than in 2024. That is especially likely given the many political changes that are expected to happen in the next few months.
Yet, I want to be more resolute in my holdings and simply stick with investing in good businesses for the long term. If I had $5,000 to invest today, here are a couple of high-quality Canadian stocks I would look to add in 2025.
A top Canadian shipping stock
TFI International (TSX:TFII) stock recently pulled back by over 10%. That might present a nice opportunity to add to this long-term compounder. While recent returns have been lacklustre, this stock has delivered a 365% total return in the past five years.
The past few years have been a tough gig for TFI. The freight and trucking market has been challenging, to say the least. It doesn’t help that TFI’s American less-than-truckload business has been underperforming.
The good news is that the company is expected to generate strong free cash flows for fiscal 2024. With a tough freight environment, the company should enjoy a robust mergers and acquisition environment. Management has noted it is on the hunt for a larger target in the U.S.
This Canadian stock trades at a considerable discount to its American peers. TFI is looking to unlock that discount through a variety of alternatives (spin-outs, sales of business segments, or mergers). Improvements in the freight environment and in its U.S. operations could result in a nice boost in cash flows in 2025 and beyond.
A top Canadian real estate stock
Colliers International Group (TSX:CIGI) is another quality Canadian stock to consider adding in 2025. Like TFI, it has faced some near-term challenges.
However, it has a long-term record of strong returns. Its stock has compounded by about 15% annually over the past 20 years. Its stock has recently pulled back by 8.5%.
The company has an internationally recognized brand in the commercial real estate brokerage business. Commercial transactions have been tepid due to elevated interest rates. With rates coming down, transaction activity is starting to accelerate.
What many in the market don’t recognize is that the majority of its business is now from recurring service revenues. Asset management, engineering, project management, financing, and property management are now substantial businesses in its portfolio.
Like TFI, Colliers is very acquisitive. In the past few years, it has drastically expanded geographically and by service category. This Canadian stock is a more diversified business than the market recognizes. As a result, you can pick it up at a reasonable valuation today.
