With tariffs and global trade tensions continuing to dominate headlines once again, uncertainty is back in full force, and volatility is surging, making it essential that investors ensure they are taking a long-term approach when it comes to buying stocks.
Between the threat of a prolonged trade war and increasing questions around inflation, interest rates, and economic growth, it’s no surprise that the stock market has seen a wave of selling in recent weeks.
However, while many investors are uneasy in this environment and looking to reduce their exposure or move to the sidelines entirely, long-term investors know better. They know that short-term chaos is exactly what creates the best opportunities to build wealth over the long haul.
So, although some stocks may still be vulnerable in the near term, the selloff has also caused many high-quality Canadian stocks to trade at undervalued prices.
Therefore, rather than panicking or trying to time the market, long-term investors should be looking to take advantage of this temporary turmoil and buy stocks they can hold for years. After all, buying great businesses when they’re on sale is the cornerstone of long-term investing.
So, with that in mind, here’s how long-term investors can navigate the ongoing uncertainty.
Why tariffs are impacting Canadian stocks
One of the reasons tariffs are such a big deal for markets is that they directly impact the cost of doing business.
And when tariffs raise expenses for companies and, in many cases, for consumers as well, that leads to lower profit margins and weaker demand, which will almost certainly slow economic growth.
Therefore, the threat of escalating tariffs presents a serious challenge because it’s not just about higher costs. There’s also the uncertainty about how governments might respond, whether additional tariffs might be imposed, how consumer behaviour will change and ultimately, how badly economic growth will be impacted.
So, it’s no surprise that we’re seeing heightened volatility in the market. And in times like these, it’s not uncommon to see investors overreact, leading to a broad market selloff that causes many high-quality businesses to trade at undervalued prices.
What long-term investors should focus on
Although short-term volatility can be disconcerting, over the long haul, the only thing that matters is the business. If the company you’re investing in can continue to grow sales, generate consistent profits, and return capital to shareholders, then a dip in the share price is a significant opportunity. That’s why long-term investors need to stay focused on the fundamentals.
For example, look at which companies continue to execute well regardless of the broader environment. These are the stocks that not only protect your capital but also give you the best chance to build long-term wealth.
Furthermore, in some cases, stocks are selling off far more than they should be. If a company’s earnings take a minor hit from short-term headwinds but the stock drops 30% or more, that’s a disconnect long-term investors can take advantage of.
A top Canadian stock for long-term investors to buy now
There’s no shortage of cheap stocks in this environment, but one of the very best to buy now while it’s undervalued is Granite REIT (TSX:GRT.UN).
Granite is an industrial real estate investment trust (REIT) with a diversified portfolio of properties such as distribution centres and warehouses. And with many investors concerned about the economic impact of a prolonged trade war, Granite has been selling off.
However, the fact that it’s now trading nearly 30% off its 52-week high shows it’s certainly oversold.
Not only are the headwinds it’s facing temporary, but over the long haul, it continues to have significant growth potential, especially as the popularity of online shopping keeps growing and companies increasingly need warehouse space.
Furthermore, as Granite continues to sell off, its dividend yield keeps climbing. For example, right now, the REIT offers long-term investors a yield of more than 5.6%.
Therefore, not only is Granite cheap, but it’s also an ideal dividend stock with plenty of long-term growth potential.
So, if you’ve got cash on the sidelines, looking for high-quality stocks that are undervalued, like Granite, is one of the best ways long-term investors can take advantage of the current environment.
