The Canadian transport stocks may have felt a bit of turbulence in recent weeks due to the anticipation of 25% Trump tariffs. Though only time will tell if tariffs are imposed, I think some premier transport plays could prove great buying opportunities at this moment of great uncertainty. Indeed, it’s hard to tell what the future could hold on the tariff front. With President Trump recently imposing tariffs on steel and aluminum (on all countries, including Canada), perhaps the U.S. could take a more targeted approach to its levies.
Either way, a wide-sweeping 25% tariff on everything seems less likely, in my opinion. As negotiations continue for the coming weeks, all ears will be on updates as we inch closer to the March deadline, when the 30-day tariff pause ends.
Indeed, it’s a highly uncertain and uneasy time for the Canadian economy. And with 2025 may very well be a recession year, I wouldn’t rush to the sidelines as a Canadian investor, especially with all the discounted names in the transport scene. In this piece, we’ll look at two beaten-down transport dividend growers that I think could be given a break if we make some progress on the front of tariffs over the coming weeks and months.
While one should always be prepared for a potential bear-case scenario, the long-term narrative remains as robust as ever. And even if the next year (or a couple of years) is filled with tariff headwinds, one has to like the longer-term (think the next 10-15 years) trajectory for the following resilient names.
Let’s check in with two discounted transport stocks that could be a great deal while tariff jitters are high in mid-February.
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CN Rail
CN Rail (TSX: CNR) stands out as a relative market bargain while it’s going for less than $150 per share. The $92.2 billion railway icon could find itself flirting with a bear market (it’s less than 2% away from a 20% drop from peak to trough). And with a 2.33% dividend yield and one of the lengthiest dividend-growth records in the transport scene, I’d not be afraid to put new money to work right here on weakness.
Of course, the ripple effects of tariffs could impact future quarters. Either way, I think such tariff threats are mostly priced in at 18.6 times forward price to earnings (P/E). It’s tough to time rebounds in the transports, but if you’re looking to play a tariff-free scenario, CNR could stand out as a timely name to consider, given the magnitude of goods its role in moving goods across North America.
TFI International
TFI International (TSX: TFII) is a less-than-load trucking company that’s also down quite a bit (around 15%) from highs. And like CNR, I view TFII as a great pick-up on the dip, with shares going for 16.8 times forward P/E. With a 1.39% dividend yield and potential upside in a no-tariff scenario, perhaps it’s time to step into the name while the jitters are still elevated.
Indeed, TFI is a magnificent transport firm that could stand to gain if the Canadian and U.S. economies fire on all cylinders again. For now, investors need to be patient as the rough gets a bit rougher over the near term. With a $15.7 billion market cap and plenty of growth potential, the name may be appealing to some of the more aggressive growth investors out there.
