Not many investors have a time horizon north of 30 months (that works out to two and a half years), let alone 30 years. Undoubtedly, many of today’s young investors who do have such a time horizon (perhaps their parents purchased shares for them upon birth) have a greater ability to take calculated risks. Indeed, even the rough patches in markets aren’t as much of a problem, especially for those who seldom check the market value of their portfolios.
With the Trump tariff tremors continuing to cloud the near- and medium-term future, with a potential recession that could work its way to Canada just a few months away, it seems like time to take action, whether that entails dumping those at-risk positions or reallocating a portion toward gold. Indeed, gold hasn’t shone this bright in a long time. And while gold may very well be a place to shelter from Trump’s tariff volatility, I’d argue that it’s still possible to lose money by overloading gold after a melt-up, especially if stocks and bonds proceed higher, perhaps if Trump gives the much-awaited green light.
As much as we’d all love Donald Trump to say the tariffs are off, investors should diversify their portfolios so that they hold up well if tariffs not only persist for longer than expected but also escalate significantly.
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Lengthy time horizon? Don’t let tariffs deter your value-investing playbook!
Indeed, if Trump can threaten China with a triple-digit percentage (whether that’s 145% or 245%), there’s always the risk he might do the same to some other nation, perhaps in response to retaliation. In any case, the transport stocks will not be immune to tariffs as they chip away at the remaining muscles of the great Canadian bull market. Though tough sledding may be looming, I still view valuations as reflecting much of the damage to come.
Furthermore, the longer-term trajectory may be discounted by investors who lack the time horizon to make their patience worthwhile. For those with a 10-30-year investment horizon, such transport stocks, I believe, are wide-moat juggernauts that seem way too cheap to ignore as they move past a period of profound uncertainty and disruption.
Indeed, such tariff headwinds won’t last forever. In essence, they represent another difficult transition for consumers and the economy. And while the end may not be in sight, I think those with long enough time horizons don’t need to make too much of the matter. If shares of high-quality companies with sound long-term earnings growth trajectories fall, they’re still worth picking up, in my view. Of course, dip-buying could be met with instant pain, but for those willing to stick it out a few decades, such pain is bound to be followed by gain.
TFI International: A great transport stock to buy on the cheap
In any case, TFI International (TSX: TFII) stands out as a cheap transport stock that many Canadian investors may be overlooking amid today’s tariff-induced jitters. Shares of the less-than-load (LTL) trucker have been rolling downhill since the middle of December. And while Trump tariffs could heavily weigh profits (the latest quarter already saw weaker demand) for some time, I think the stock’s multiple, 17.8 times trailing price to earnings (P/E), high-quality dividend (yielding 2.26% today), and longer-term narrative still make the name a worthy buy on the way down.
Shares have already lost close to half of their value. And while tariffs could take a larger bite out of future quarters, I’d be inclined to ride out the volatility en route to a hopeful trade deal at some point down the road. As newly elected Prime Minister Mark Carney takes a tougher stance at the negotiating table, perhaps a deal may not be all too far off, as some pessimists think.
