With Trump tariffs hanging over the Canadian stock market, it can be challenging to know what stocks are best to own right now. Investors can help offset the recent stock market volatility by keeping a diversified stock portfolio.
You don’t want to be over concentrated in this type of environment. Too much exposure to one industry, sector, or stock could quickly sink the performance of your portfolio.
Stocks are swinging drastically on earnings misses, market news, or industry news. You are not always going to time or bet perfectly, so it helps to have a wide mix of businesses in your holdings.
If I were investing $7,000 for my 2025 TFSA (Tax-Free Savings Account) contribution, here are three diverse Canadian stocks I would look at adding right now.
A steady Canadian dividend stock
With a market cap of $32 billion, Pembina Pipeline (TSX:PPL) is one of Canada’s largest pipeline and midstream companies. This Canadian stock has a strong infrastructure network across Western Canada.
There are several reasons to like this company. Firstly, it pays a nice 4.9% dividend yield. That dividend is well-funded by its contracted businesses. It has been growing that dividend by a low single-digit rate.
Secondly, Pembina has a strong investment pipeline. It has several pipeline expansion opportunities, as well as its Cedar LNG project on the west coast of British Columbia. It also announced a deal to potentially help power an industrial data centre complex in Alberta.
The company is very well-managed. This Canadian stock has a sector-leading balance sheet. If you just want stable dividend income and modest capital performance, this is a safe stock to weather the recent volatility.
A Canadian value stock
If you don’t mind looking for stocks that are unloved and undervalued, Calian Group (TSX:CGY) is an attractive Canadian stock. After declining 13% this year, it only has a market cap of $494 million.
Calian provides a diverse mix of services. It has a focus on healthcare, specialized technologies, I.T./cybersecurity, and military training. Some of its largest customers include the Canadian military and NATO. With geopolitics continuing to heat up, Western military spending is increasing. That should favour Calian for future backlog growth.
It has grown through a smart acquisition strategy and modest organic growth. Lately, its stock has been so cheap (a forward price-to-earnings (P/E) ratio of 7.7) that management has begun to aggressively buy back stock.
Calian stock yields 2.6% today. For now, hold this Canadian stock for the income, but expect good, steady mid-teen returns as it plays out its growth strategy in the years ahead.
A growth stock for the long haul
Descartes Systems (TSX:DSG) is far from a Canadian value stock. Even after 14% year-to-date decline, Descartes trades with a P/E ratio of 41 times. That is down from a P/E ratio of 57 times just a few quarters ago.
It operates a global logistics network complimented by a wide array of specialized transport/supply chain-focused software services. The company has high recurring revenues, strong margins, and high free cash flow generation.
Recent trade tensions have created a lot of uncertainty for suppliers and logistics providers. This could be disruptive in the near term but favourable in the long term.
Descartes’s software can help customers navigate the challenging trade environment. Likewise, a weakened economy means it can deploy its cash-rich balance sheet into accretive acquisitions. It is a smart business. Near-term challenges can be long-term opportunities. That is the type of Canadian stock you want to add in this environment.
