Don’t expect the Trump tariff volatility to calm down anytime soon. Indeed, the on-again and off-again tariffs are making the market waters profoundly volatile in both directions. Indeed, a small dose of cautious optimism may be warranted after the latest (temporary) tariff exemption for electronics imported to the U.S. from China alongside the ongoing 90-day pause on a broad range of goods from most other nations.
At the end of the day, corrections (and bear markets) happen occasionally. And it’s very concerning, scary events that tend to accompany them. Whether we’re talking about the COVID-19 crisis and a lockdown’s potential to derail the world economy or tariffs and their detrimental effect on world trade, buying into corrections can be nerve-rattling. If you’re a retiree, it can be quite the chore to hang on, let alone buy anything promising that flies by your radar on the dip.
Either way, this piece will look into two Canadian growth stocks that I think are cheap enough that they may be relatively spared come the next leg lower. So, if you’re fastening your seatbelt but still wish to put some excess cash to work (inflation could make a comeback later in the year), the following pair, I believe, should be put on your buy watchlist going into May.
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TD Bank
TD Bank (TSX:TD) has been one of the dividend dogs in the banking scene over the past year. Still, things are looking up for the bank that’s still healing from its past anti-money-laundering shortcomings. With a brilliant new chief executive officer in Raymond Chun, who’s ready to lift TD from one of its worst self-made ruts in recent memory, I think investors should give the big bank the benefit of the doubt, especially while shares are trading at some depressed multiples.
Indeed, the new management is a catalyst that could make TD a premier bank stock again. Of course, tariffs and other roadblocks present new challenges in this new year. Either way, the stock is off to a decent start to the year, up close to 9% year to date. Can the relative outperformance continue? I think it could. I’d lock in the 5.2% dividend yield before TD can show the world it’s changed for the better.
CN Rail
The surge in volatility may very well be the “new normal” for the rest of the year as investors go back and forth between Trump’s aggression and backtracking on tariffs. Of course, the magnitude of risks is quite elevated at a time like this, but I think there’s little reason to delay any stock purchases you would have done otherwise. CN Rail (TSX:CNR) stands out as a blue-chip buy right here as investors gauge the potential impact tariffs will have on cross-border trade.
Though I have no idea how things will play out as Canada and the U.S. go to the negotiating table, I think the odds are higher that the U.S. will reach deals with its allies first. Either way, tariff relief could propel names like CNR stock, perhaps by enough to push them out of a bear market. At 19.8 times trailing price to earnings, with a 2.6% dividend yield, CNR stock looks like a bargain that’s finding comfortable support in the $135 range.
