The TSX Index finished 2024 with a bang, but the new year has proven quite choppier. And though the rough first few months (or the first quarter) of the year doesn’t mean it’s time to write off the rest of 2025, I think that investors seeking just lower valuations (and wider margins of safety) can do so as volatility rises. Indeed, Trump tariffs have been the talk of the town this week.
They came online on Tuesday, leaving those who thought Trump was bluffing in a bit of shock. While tit-for-tat tariffs are the last thing the U.S. and Canadian economies need, I think that there’s no sense in getting startled or frightened (perhaps enough to panic-sell stocks?) over matters that everyone is already scrambling over.
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Don’t let tariffs derail your investing game plan!
Remember that you must play the long-term game and not seek to time markets over matters that may already be priced into the stock market. In any case, this coming week is sure to be eventful. Perhaps there will be compromises made or a deal struck that takes all tariffs off the table on both sides. In any case, there are a lot of questions surrounding trade right now.
And as you’re probably aware by now, there are few things that disgust investors more than uncertainty. These days, there’s no shortage of it. In the coming months, it would be nice to get some answers to outstanding questions. Either way, investors should stay the course and perhaps shift gears toward defensive dividend stocks instead of the red-hot tech plays that are now starting to show subtle signs of fragility.
So, where does the value lie on the TSX Index at today’s uncertain juncture?
Of course, the tariff-sensitive names could continue to be in the blast zone of volatility, especially if Trump retaliates on Canada’s retaliatory tariffs. Indeed, an escalation of a trade war could weigh heavily, not just on the tariff-sensitive names but perhaps on the economy at large. Either way, for those looking to seek a bit of shelter from the non-stop tariff headlines, perhaps checking out a name like Fortis (TSX:FTS) could prove wise.
At around $64 per share, FTS shares boast a nice 3.84% dividend yield alongside a very modest 19.75 times trailing price-to-earnings (P/E) ratio. While Fortis stock is pricier than it’s been over the past year, I also view it as timely, with the name on the cusp of a potential breakout to new all-time highs.
The steady utility plays are looking up
Personally, I’d rather get into a utility stock as it breaks out while getting a decent price of admission than pick up shares in a consolidation channel at a slightly lower price. Indeed, as uncertainties mount and investors flock back to the safety plays, perhaps there could be more multiple expansion in store for one of the best-run utilities on this side of the border. With a 0.24 beta, the stock is less likely to wobble on those painful down days like the one we had on Tuesday.
After a weak past five years of market-trailing gains (just 9.4% in five years), perhaps FTS is in a spot to make up for lost time.
