Now is a good time to make a lump sum investment in buy-the-dip growth and dividend stocks. Trump tariff uncertainty has paused for a while since the US government is temporarily shut down until a new budget is passed. This will give time to the market to absorb the shocks and businesses to adjust to the new tariff regime. Stocks that were hit by the tariff war are recovering from their bottom. You could consider investing $21,000 in three Canadian stocks right now before the recovery rally gathers momentum.
Top three Canadian stocks to buy right now
Descartes Systems stock
Descartes Systems (TSX:DSG) stock dipped 27% from its February 2025 peak as the tariff war hit North American markets. The supply chain management and logistics supplier was struck as the company earns 67% of its revenue from the United States. At the start of 2025, DSG stock was trading at a 51 times forward price-to-earnings ratio. Considering the stock grows its earnings per share (EPS) at an average annual rate of 20%, it seemed overvalued. However, tariff uncertainty slowed the EPS growth estimate, leading to a correction in the stock price.
The market appears to have bottomed out, and the momentum from trade negotiation expectations is fading. The tariff war could either shift the global supply chain or geopolitical pressure could ease tariffs. In either case, trade volumes will revive, maybe this year or next, or a year after that. The timing is difficult to tell. Thus, it is said, you can’t time the market.
However, with Descartes, you are assured that recovery is in the cards, given its zero debt and sustained 44% adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin. You could consider investing $7,000 in Descartes stock right now and holding it for a long time, as it could double your money in five years.
Constellation Software stock
Constellation Software (TSX:CSU) stock is now reviving after a 20% dip in September. Behind the 7% recovery last week is insider trading activity. Note that the stock fell after its founder resigned abruptly due to health reasons. A management change tends to spur insider trading. In CSU’s case, the trading was positive as insiders were in a buy mode.
It is time to buy the stock as it seems to have bottomed out. Constellation keeps acquiring vertical-specific software companies that contribute to its free cash flow (FCF) and enterprise value. This enterprise value has increased its share price. Since Constellation has never done a stock split, a single share is priced above $4,000.
The recent underperformance of the stock is not because the compounding effect of the acquisition is not working. The company consistently delivered revenue and FCF growth. However, a slowdown in tech spending amidst macro uncertainty and the fear of artificial intelligence’s (AI) impact on licensing software has kept CSU’s shares from rallying significantly.
Note that all these reasons behind the dip have no material impact on fundamentals. This makes it a good case of buying the dip.
Canadian National Railway
Canadian National Railway (TSX:CNR) stock has been in a downtrend since March 2024. The company has a large rail network that carries cargo within Canada and across the border to the United States. It benefits from a rise in freight charges, but the real growth comes from trade mix and volumes. Some goods, such as automotive, are high-margin, whereas grain and coal are low-margin.
This stock was hit hard by the trade war as lower international trade volumes decreased its revenue by 1% in the second quarter. The management scrapped its fiscal 2024–2026 outlook and reduced its fiscal 2025 guidance. The stock seems to have bottomed out, absorbing the tariff hit. The railway stock is a good dividend payer, growing dividends for the last 20 years.
While the stock has grown its share price, it is a buy for the dividend growth. A 2.6% dividend yield may not look appealing, but an average annual dividend growth of 11% can help you build a strong passive income pool.
