Trump tariffs are really rocking U.S. and Canadian markets. And the drama may not be over as we enter April and new, potentially higher tariffs come online on a broader range of goods. Indeed, the TSX Index is off just shy of 6% at the time of writing, while the S&P 500 is down close to 8% after briefly flirting with a correction (a 10% decline). Given how much both economies have to lose from tariffs and retaliatory tariffs, one has to think that landing a deal is a top priority for both sides.
Undoubtedly, with the U.S. applying tariffs to Mexico, Europe, and China, perhaps the pains could be enough to backtrack before the midpoint of the year. Indeed, a recession is the last thing the Trump administration wants, especially now that the stock market is deep in the red since inauguration day.
Personally, I think the damage is just a bit overdone. And while it’ll take more to calm the nerves of investors on both sides of the border, perhaps nibbling on some relatively cheap names that have what it takes to (mostly) sidestep tariff headwinds could be the ones that can continue delivering for investors.
Indeed, the TSX Index may not be as close to a correction as the S&P 500, but this “half correction,” I think, is a terrible dip to waste if you’ve got plenty of cash sitting on the sidelines that’s ready to be deployed in market bargains. Here is one of the more intriguing names that may be a great bet, regardless of what comes up next on the front of tariffs.
TD Bank
TD Bank (TSX:TD) currently goes for just shy of $84 per share after taking a bit of a breather since sustaining a nice rally off its December lows. Undoubtedly, TD Bank has a new chief executive officer and a revamped game plan to return to its former glory. While TD stock may be trailing behind some of its Big Six peers in terms of share price performance of late, I think the gap can be narrowed as the new management gets to work.
While there’s still some mess from the money-laundering fiasco to clean up, I think management is on the right track. As the mess is cleaned and new growth levers are pulled (perhaps larger investments in tech and the domestic market), I wouldn’t be surprised if TD stock makes a run for prior all-time highs.
For now, the stock still looks cheap at 17.7 times trailing price-to-earnings (P/E), with a 5.1% dividend yield. Of course, an economic recession poses a huge hurdle for the big banks. However, as a bank that’s already been through so many setbacks, I have faith that management can steadily navigate the macro headwinds.
Indeed, tariff troubles and recession chatter could cause a wave of analysts to downgrade their price targets and ratings on the big Canadian banks. Even if TD stock’s seemingly cheaper than its rivals, I would brace for such downgrades and their potential overhang on the stock going into year’s end. At the very least, you’ll be able to get more yield for your investment dollar should the recent relief rally falter at the hands of any tariff-induced economic woes.
