As Donald Trump returns to the White House, investors braced for another round of trade wars. During his previous presidency, tariffs and protectionist policies rattled markets, affecting industries from agriculture to manufacturing. With tensions between the U.S. and China still simmering, a second Trump term now means more tariffs, supply chain disruptions, and uncertainty for global businesses.
Canadian investors looking to protect their portfolios should consider stocks that can weather these challenges and even benefit from shifting trade policies. Two companies that fit the bill are Nutrien (TSX:NTR) and Fairfax Financial Holdings (TSX:FFH).
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Roaring reputations
Nutrien is the world’s largest producer of potash and a major player in nitrogen and phosphate fertilizers. While the stock has struggled recently due to weaker fertilizer prices, its long-term fundamentals remain strong. In 2024, Nutrien reported net earnings of $674 million, a notable decline from the previous year as lower potash and nitrogen prices put pressure on margins. However, the company still generated significant revenue, with total sales reaching $25 billion for the trailing 12 months. Despite short-term headwinds, Nutrien’s long-term prospects remain tied to global food demand. As trade wars shift supply chains and food security becomes a priority, countries may look to lock in stable fertilizer supplies, thereby benefiting a major producer like Nutrien.
Fairfax Financial, led by the well-known Canadian investor Prem Watsa, has built a reputation as a defensive stock for uncertain times. The company operates like a hybrid between an insurance giant and a value-driven investment firm, making it well-positioned to benefit from market volatility. In its most recent quarter, Fairfax reported net earnings of $1.3 billion, contributing to a full-year profit of $4.3 billion. While this was a drop from the previous year’s record earnings of $5.1 billion, the company continues to generate strong cash flow and maintain a solid balance sheet. Fairfax’s investment strategy, which focuses on undervalued businesses and long-term value creation, has historically helped it outperform during economic downturns.
Value and income
Nutrien’s recent struggles have made it an attractive buy for long-term investors. The stock is down significantly from its highs, with shares trading around $70, well below its 52-week high of $83.14. Part of this decline stems from weaker fertilizer demand, but analysts expect prices to stabilize in 2025 as global supply tightens. With a forward price-to-earnings ratio of just over 13, Nutrien offers good value, especially given its role in an industry that remains essential regardless of economic cycles. The company also pays a solid dividend, yielding 4.3%, making it appealing to income-focused investors.
Fairfax Financial, despite some recent stock volatility, has remained a solid performer. Shares are currently trading around $2,028, reflecting a gain of over 40% in the past year. The company has maintained strong underwriting discipline in its insurance operations while leveraging its investment portfolio to generate long-term returns. Unlike many insurers that struggle in high-inflation environments, Fairfax has managed to navigate these conditions successfully, maintaining a profit margin of over 11%. The company’s recent dividend increase, with a payout of $15 per share, further demonstrates its financial strength.
Considerations
One of the biggest advantages of investing in these two companies is the ability to remain resilient in the face of global uncertainty. Nutrien benefits from a growing global population and rising food demand, while Fairfax has a track record of capitalizing on market downturns. If Trump’s trade wars once again disrupt global markets, both companies are well-positioned to either withstand the turbulence or take advantage of shifts in trade flows and asset valuations.
Looking ahead, Nutrien’s long-term strategy focuses on expanding its retail business and enhancing its digital agriculture offerings. This shift could help offset some of the volatility in fertilizer prices by providing a steady stream of recurring revenue. Meanwhile, Fairfax continues to deploy capital strategically, with recent investments in the infrastructure and energy sectors expected to drive further gains.
Bottom line
Nutrien provides exposure to an essential industry with significant growth potential, while Fairfax offers stability and long-term capital appreciation. While no stock is entirely immune to market swings, these two companies offer a compelling combination of resilience and opportunity, making them ideal choices for Canadian investors preparing for the possibility of another round of global trade tensions.
