The $7,000 Tax-Free Savings Account (TFSA) contribution limit for 2025 can give you some exciting investment opportunities for what is shaping up in 2026 with the right stock picks. Everyone thought 2025 would be the year of growth after tepid returns since the 2022 tech stock meltdown. But the U.S. tariff situation changed the global economy. The tariff shock has delayed the growth, not prevented it.
What’s brewing in the Canadian investment landscape?
On one side, there are concerns that a 2008-like recession is building up, with analysts drawing parallels to the similarities in today’s markets and those of the past crisis. Some similarities are rising unemployment rate, slow recovery in house buying, cash hoarding by big investors, and a surge in gold buying.
On the other side, there are opportunities shaping up for a shift in the global supply chain. A full-blown tariff war with all U.S. trade partners has awakened the partners to the idea of diversifying their supply chain and reducing reliance on the United States. This shift could create new investment avenues for Canada.
Recently, Prime Minister Mark Carney announced plans to fast-track approval for a liquified natural gas (LNG) plant, copper mining, and expansion of the container terminal at the Port of Montreal. He stated that the country is looking to diversify trade partners, creating opportunities in sectors that have the ability to compete in export markets.
Both sides have stock market investment opportunities.
Stock picks for a recession
If recessionary fears are keeping you awake, there are some recession-proof stocks that tend to do well when other stocks fall.
Loblaw (TSX:L) is a Canadian grocery chain that has tripled in the last five years. Although the stock trades near its all-time high, there is potential for more growth ahead of the holiday season sales. The rising unemployment rate has shifted consumer spending to essentials and cheap luxuries. The move towards Buy Canadian is driving demand for Canadian goods. The holiday season could see increased sales in Loblaw as more expensive goods might take a backseat in holiday season buying.
Lundin Mining (TSX:LUG) is another recession-proof and tariff-proof stock. Gold retains its value as an exchange commodity. And with countries building their gold reserves to hedge themselves against dollar reserves, the demand for gold will only grow. Economic uncertainty shakes the value of a country’s currency. When foreign exchange losses widen, gold helps hedge the loss. Unlike the pandemic, this gold buying is likely to continue for a few years as the global supply chain shifts.
You could consider allocating $3,500 in the above stocks to reduce your downside risk. While the two stocks may underperform the market in a strong economy, they outperform in a weak economy.
Stock picks to benefit from a shift in the global supply chain
The next opportunity will come from Canadian LNG exports. Descartes Systems (TSX:DSG) can help facilitate the planning and execution of LNG exports through its Global Logistics Network and a range of logistics and supply chain solutions. Some of them include customs and compliance, global trade intelligence, inventory management, and more. Descartes also benefited from the 2022 surge in LNG exports to Europe.
At present, Descartes stock is trading downwards as many of its customers have postponed trade amid tariff uncertainty. Despite lower trade volumes, the company reported revenue and earnings growth because of increased demand for wait-and-watch solutions like global trade intelligence and cost-cutting initiatives. Some strong momentum could be in the cards as the global trade shift materializes.
TC Pipelines (TSX:TRP) will be another beneficiary of the LNG export. The company has even spun off its oil pipeline business to focus purely on natural gas transmission. Its Coastal GasLink pipeline plays a crucial role in connecting LNG plants to the port.
If the government eases approval of several gas pipelines, it can accelerate infrastructure development and bring more such pipelines into operation, which will generate toll revenue. At a time when many dividend stocks are suspending dividend-reinvestment plans (DRIPs), TC Pipeline started a DRIP in July 2023. This shows the company’s confidence in generating better future returns from its current investment in natural gas pipelines.
