If you’re looking for relative value and some pretty stellar longer-term momentum, there’s no shortage of names to give a second look at the TSX Index. In this piece, we’ll check out shares of pipeline firm Enbridge (TSX: ENB) and top-tier uranium producer Cameco (TSX: CCO) to determine which robust outperformer has what it takes to continue delivering results for long-term investors. Undoubtedly, tariffs have made the TSX Index a tougher place to invest this March.
And while such a market-wide sell-off is bound to punish even the top performers, I think that cool-minded investors may have the opportunity to pick up shares of such unfairly punished names on weakness. Indeed, tariffs and recession risks can weigh down just about everything in the stock market.
However, some names stand to take just a bit of a harder hit than others. Of course, let’s also not forget that some progress on trade can be made in the coming weeks and months. With Ontario premier Doug Ford recently remarking on a “productive” meeting with U.S. president Donald Trump, perhaps there is room for optimism.
Like it or not, the S&P 500 fell into what was a run-of-the-mill correction, one that should be on investors’ radars after more than a year without experiencing one. Though it seems like a recession-driven bear market could hit stocks harder, I’d argue that it’s far better for investors not to change anything too drastically with their investing game plan. If you buy stocks every month, a correction may entice you to buy a bit more than you would, given the lower prices.
In the case of Enbridge and Cameco, I think today’s entry points are attractive for the many investors who may have sat out their initial multi-year rallies. Let’s check in on the two names.
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Enbridge
Enbridge stock may have dipped along with the TSX in recent weeks, now down around 5% from recent highs. Still, I think the dip is a mere blip in what seems to be a magnificent year-long rally. Over the past year, the stock is up close to 28%. And the dividend yield remains rich at 6.13%.
At 26.2 times trailing price to earnings (P/E), a strong case could be made that the pipeline giant is still undervalued, especially if a tariff-fuelled recession ends up being milder than expected or if it never materializes. Either way, Enbridge stock looks like a stellar pick-up here as management seeks to keep wheeling and dealing.
Cameco
Cameco is a fantastic uranium miner that’s down around 30% from recent highs. If you’re still a believer in a nuclear-powered future, the dip looks like nothing more than an opportunity to buy. Undoubtedly, the fourth quarter, though decent, may not have been enough to nudge shares higher.
And while there’s no telling how long this bear market in shares will drag out, it is worth noting that the name is still up over 12% in the past year. Indeed, the latest 30% drop seems more like a correction than a bear market. Either way, investors keen on the name may wish to start nibbling as the stock looks to make a roundtrip back to 52-week lows in the low-$50s, around 10-15% lower than current levels.
Unless you seek a higher yield, I’d go with Cameco stock for the long haul. In my opinion, it has a considerable upside over the next four years.
