Donald Trump, the president of the United States, had announced he would impose a 25% tariff on goods imported from Canada, while energy resources will have a lower tariff of 10%. However, after discussions with Prime Minister Justin Trudeau, Trump has agreed to delay tariff imposition by 30 days. Despite the positive development, investors still look nervous, with the S&P/TSX Composite Index falling 1.14% yesterday. Amid the uncertainty, investors can buy the following three Canadian stocks that are less susceptible to trade war.
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Waste Connections
Waste Connections (TSX:WCN) is North America’s third-largest waste management company. It collects 86% of its revenue from the United States and 14% from Canada. The company operates primarily in secondary or exclusive markets, facing lesser competition and enjoying higher margins. Given the essential nature of its business, the company’s financials remain resilient irrespective of broader market conditions.
Moreover, the Toronto-based waste management company continues to expand its footprint with strategic acquisitions. Last year was its busiest, with record acquisitions that could also contribute to its 2025 revenue growth. Also, continued volume growth and price hikes could boost its financial growth in the coming quarters. Amid these growth initiatives, WCN’s management projects a top-line growth of mid- to high single digits this year.
The company’s voluntary turnover is falling amid improved employee engagement and safety-related metrics, thus expanding its operating margins. Meanwhile, the management is projecting a high single-digit EBITDA (earnings before interest, tax, depreciation, and amortization) growth this year. Considering all these factors, I expect WCN to outperform despite the volatile environment.
Fortis
Another stock that is less impacted by this ongoing trade war is Fortis (TSX:FTS), which services 3.5 million customers across Canada, the United States, and the Caribbean. Given its regulated asset base and low-risk transmission and distribution business, its financials are less susceptible to commodity rates. The electric and natural gas utility company could also benefit from a strengthening U.S. dollar, as it could favourably impact the contribution from its United States business.
Moreover, Fortis continues to expand its asset base and has planned to invest around $26 billion over the next five years to increase its rate base by $14 billion to $53 billion by 2029. Also, given its capital-intensive business, the company could benefit from the central bank’s monetary easing initiatives. Amid the favourable market conditions and healthy growth prospects, the company’s management hopes to raise its dividends at an annualized rate of 4-6% through 2029, thus making it an excellent buy in this uncertain outlook.
Telus
My final pick is Telus (TSX:T), one of Canada’s three top telecommunication companies. The digitization of businesses and growth in remote working and learning have increased the demand for telecommunication services. Telcos enjoy healthy cash flows due to their recurring revenue streams, thus allowing them to reward their shareholders with consistent dividend payments. Since 2004, the company has returned $26 billion to shareholders, with $21 billion through dividends and $5 billion through share repurchases. Also, it currently pays a quarterly dividend of $0.4023/share, translating into a forward dividend yield of 7.59%.
Moreover, Telus is expanding its 5G and broadband infrastructure, which could continue to expand its customer base. The company’s cost-cutting initiatives and falling interest rates could boost its profitability. Meanwhile, the company’s valuation also looks attractive, with its next-12-month price-to-sales multiple at 1.5, making it an excellent buy.
