It’s a fairly tough time to be a new investor, with Trump tariffs sending global stock markets viciously in both directions (we’ve seen some pretty historic down and up days in recent months).
Still, long-term investors shouldn’t let a bit of volatility and a V-shaped recovery prevent them from owning pieces of strong businesses for decades at a time. Indeed, it’s tough to pick from the consumer scene these days, given all the magnificent names that have demonstrated resilience through the past several years of supply-side disruptions.
From COVID to tariffs, the disruptions will make the broad basket of consumer staples companies that much more resilient in climates that are far from normal.
Either way, with a 90-day pause on sky-high (think triple-digit percentage) tariffs between the U.S. and China, there’s room for Mr. Market to be hopeful for a change. After all, a 245% tariff on goods imported to the U.S. from China is pretty much the highest it can get, as it stomps out just about all trade between the two superpower nations.
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The second half could be bright for Canadian consumers.
As we turn the page on the first half of the year in a month and a half, new investors will look for Trump trade deals and tax cuts, and perhaps the markets will “boom” as Trump noted earlier in his presidency. Of course, I wouldn’t dare time the markets, given quadruple-digit point moves in the Dow Jones Industrial Average are no longer surprising — they’re pretty routine for 2025.
In any case, the consumer seems to be in a weird spot right now. Tariffs and fear could keep them from spending, but that could change on a dime if Trump starts making deals and we’re all given more long-term certainty for a change.
The question is whether consumers will start spending heavily again in the second half as Trump dials back the tariffs. Probably. Either way, the consumer discretionary firms, which have been weighed down by sagging consumer sentiment, could be the biggest gainers over the next year or two.
Canadian Tire: A deep-value dividend stock to play a recovering consumer
If I could pick up a few shares of a single consumer stock in May, it’d have to be Canadian Tire (TSX: CTC.A). The iconic retailer is up more than 8% in a month, thanks partly to a pretty decent quarterly number in the face of macro unknowns. Given the robust quarter and hope on the tariff front, I’m inclined to stand by the retailer as it does its best to optimize its supply chain and potentially capitalize on the “buy Canadian” mindset, which could stick around far longer than the current tariffs between Canada and the U.S.
With a well-covered and growing dividend, currently yielding 4.4% and about as much volatility as the broader TSX Index (0.99 beta), I view the name as a fairly solid bet for those who believe in the resilience of the Canadian consumer. The company’s management team remarked on their resilience, which could bode well for future quarters.
Either way, the stock looks like a bargain at just 10.4 times trailing price-to-earnings (P/E). It’s a consumer-sensitive dividend stock for sure, but one that I believe has room to roll higher.
