You wouldn’t know it just by looking at the TSX Index, but Canada’s economy actually contracted by 1.6% in the second quarter. Indeed, tariffs and their impact on exports may have frightened investors earlier in the year. But nowadays, things are looking up, and there’s a sense of hope that the GDP will bounce back robustly moving forward. Indeed, the GDP actually rose for the month of July.
Sure, 0.2% growth isn’t all too much to get excited about, but, nonetheless, Canada’s economy might be more resilient than investors think. As such, I wouldn’t change all too much about one’s investment portfolio moving forward. If anything, I’d look to take advantage of weakness in certain economically sensitive names which, I believe, could be poised for a nice recovery going into 2026.
So, in short, the headlines have not looked all too good in recent months. Whether we’re talking about the tariff impact or the rising risk of a recession, I think the best thing that investors can do is stay invested and be ready to do some buying in some of the less-loved corners of the market. That’s where I think there’s rich value to be had in a market that may be fairly valued or even highly valued, depending on who you ask.
In any case, here is one name that I’d consider buying into recent weakness, even though things seem quite bleak.
TFI International
TFI International (TSX:TFII) is one of the Canadian transport companies that’s having an awful year, now down close to 35% year to date. Indeed, starting off the year with a February crash isn’t a great way to set the stage for the year. And while TFII shares have sat out the bull market in the TSX Index, I don’t think the trucker will stay down for all too long, especially once Canada’s economy gets back up under its own power, perhaps as soon as early 2026.
Of course, TFII stock remains a risk-on name that could return to 52-week lows if the modest July bounce proves to be an outlier. The big question over the coming months is whether Canada is on track for a recession. Indeed, the stock market is not the economy. The former is thriving while the latter has faced notable headwinds. Either way, a recession is defined as two consecutive quarters of negative GDP. If the third quarter (it’s just a few days from wrapping up) sees even the slightest bit of growth, a recession will be avoided.
The July number is a good sign, as are some economist projections, which are calling for sub-1% quarterly growth that’d allow the economy to steer clear of a recession. Either way, I think a near-recession warrants a closer look at the battered transports. And at 20.5 times trailing price-to-earnings (P/E), I view TFII as a great name to pick up while demand is down and tariff challenges are high. Expectations are low right now, which is precisely why I’m drawn to the name, as it might not take long to get back on track.
In the meantime, there’s a nice 2% dividend yield to collect while one rides out the rougher terrain.
