Trade tensions may not be as high as they were just a few weeks ago. Some recent indications suggest that the U.S. could be backing off on plans to go even further down the tariff rabbit hole, with some experts suggesting Trump has “blinked” in his “negotiation strategy” with other nations and that the worst of this whole debacle is over.
I hope so. But with uncertainty still remaining relatively high, there’s good reason why some investors may certainly feel the need to pick and choose their holdings with care. In this environment, finding stocks that are undervalued and less exposed to trade-related uncertainty does seem like a good idea.
In this vein, I thought I’d highlight two Canadian stocks I think can outperform regardless of the shifting trade policy coming out of the U.S. Here are two companies I remain bullish on and why I think they have the potential to outperform long term.
Source: Getty Images
Shopify
Shopify (TSX: SHOP) continues to be the top Canadian growth stock I think has the potential to outperform over the long haul for a range of reasons.
The company’s status as pandemic darling is on full display in the chart above, with investors easily able to recognize the value the market saw in Shopify when we were all locked down. Of course, those days are now over, but the question remains the same: will shoppers continue to shift their purchasing activity online or revert back to pre-pandemic trends? The data suggests the latter is more likely to be the case, with Shopify’s GMV growth continuing to remain robust.
With very strong fundamentals, a profitable business model, and strong growth catalysts on the horizon, Shopify’s geopolitical positioning as a global player (with significant exposure to the U.S. market) should insulate the company, given the fact that a majority of its business happens stateside.
Brookfield Asset Management
As a company that Prime Minister Carney continues to be involved with, Brookfield Asset Management (TSX: BAM) may not seem like the logical choice to include on this list, particularly if trade tensions do indeed heat up.
However, the company’s status as another truly global player in a range of businesses spanning renewable energy, private equity, real estate and other sectors makes this diversified conglomerate one that’s worth owning. And like Shopify, Brookfield also has considerable interests in the U.S. market, with most of its revenue and earnings derived from its U.S. operations.
Of course, under a Trump administration, we may see less activity in the renewable energy sector as tax credits and government-sponsored investments in this space die down. But if interest rates do come down (a clear policy goal of Trump’s team), the company’s real estate and private equity businesses could get a boon, insulating this company from a cash flow perspective.
It’s my view that both companies are likely to be long-term winners. But they’re also both well-positioned to manage through whatever turmoil may be ahead as trade policy shifts.
