There has been a lot of noise around Trump tariffs and their impact on the Canadian economy. While some experts suggest that U.S. President Donald Trump is using tariffs as a bargaining strategy, some are warning against a downturn. At times like these one often tends to hoard cash due to concerns about market volatility. However, hoarding cash may not be the solution. Investing is not a one-time activity, but an ongoing process. An investor who flows with the market and stays invested benefits from these market cycles.
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Three all-weather stocks for confidence in any market
While we say it pays off to stay invested in the long term, which stocks you should stay invested in? Not all stocks are long-term investments. Some are cyclical, some speculative, and some high risk. Buying any of those stocks at their 52-week high increases risks. All-weather stocks have a strong balance sheet, stable revenue and cash flow, and the potential to grow.
As Warren Buffet said, “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” Here are three all-weather stocks you would be glad to hold even after 10 years.
Telus stock
Telus Corporation (TSX:T) is a defensive all-weather stock that can give you returns in any kind of market. While you may note that the stock price had been in a downtrend for almost three years, the company continued to grow its dividend per share by 7%. The share price dip was due to the normal course of business and changes in the industry.
Telus has adapted to the industry change. It has found a way to grow its earnings in the new regulatory environment of competitive prices and network sharing. The year 2023 saw its average revenue per user (ARPU) fall and the subscriber churn rate rise. However, this is now stabilizing. Telus is pushing its bundled services in new regions. Once the subscriber base is set, it could focus on increasing its ARPU.
The company’s dividend payout and leverage ratio have exceeded its target range. However, the management is confident that the ratios will stabilize in the medium term as earnings increase and interest expense falls. Telus has little exposure to the United States and is unlikely to be affected by tariffs. However, a reduction in immigration targets could slow its revenue growth in the short term.
In the long term, the 5G opportunity could bring subscription and bundled service opportunities as many embedded devices will be connected to the internet.
Descartes stock
Descartes Systems (TSX:DSG) is a growth stock for any kind of weather. Its Global Logistics Network (GLN) ensures a smooth flow of communications and documents. Trade wars can create short-term setbacks with reduced trade volumes. However, they also create demand for the customs and compliance solutions offered by Descartes. Another interesting thing about trade wars is they are short-lived. If one trade route is restricted another opens, creating strong trade volumes.
Descartes benefits in either scenario. Moreover, its net cash position and availability of a revolving credit facility give it ample financial flexibility. However, the stock is currently trading at a high valuation, with a price-to-earnings ratio of 73.3 times and a price-to-sales ratio of 16 times at a 12-month high. This is a stock to buy on the dip. However, a long-term view of 10 years makes the stock a buy even at the current price.
Canadian Tire stock
Canadian Tire (TSX:CTC.A) is an all-weather stock that has a diverse product offering from hardware and auto parts to sports and outdoors. Its sports and outdoor sales jump when discretionary spending increases while the essentials segment sales are sustained when consumer spending is low. The retailer also provides financial services and benefits from interest income.
The retailer can offer you quarterly dividends and even grow them annually. You can accumulate shares of Canadian Tire to build a strong source of passive income. The dividend reinvestment plan (DRIP) can help you compound the income over 10 years or more.
