The Canadian dollar has had a bit of a volatile year in 2025. After starting the year at sub-US$0.70, the loonie has stayed near that level for much of the year. Should that softness continue, it could expose an element of opportunity for some investments, particularly exporter stocks.
Why does a softer loonie help exporters?
As the loonie dips, exporter stocks see benefits come from stronger earnings, and potentially, stock growth. This is because of three unique factors that take place.
First, exporter stocks see their products become cheaper in foreign markets. This can lead to boosted sales volumes as demand persists.
Second, the revenues earned in foreign markets (often in U.S. dollars) convert back into Canadian dollars and provide an immediate boost to profit margins.
Finally, demand for Canadian services, and even tourism gets a welcome bump as Canada is viewed as a cheaper option for international customers.
As enticing as that sounds, there are some negatives to consider.
Import costs rise for everything from fuel to equipment and parts. Unless those increased costs are passed down to consumers, these can eat into margins substantially.
Then there’s tariffs. Any currency benefit can be offset by the imposition of a tariff on goods.
Fortunately, there’s a sweet spot that exists in the middle. These companies have strong foreign demand coupled with U.S.-dollar revenue, making them exporter stocks that could benefit from a softer loonie.
Canadian National Railway
Canadian National Railway (TSX:CNR) is one of the largest railways in North America. Railways like Canadian National transport massive amounts of products, raw materials, chemicals, fuels, and everything else imaginable to warehouses and factories around the continent.
In the case of Canadian National, that works out to an incredible $250 billion per year in goods. Most of the freight goods that Canadian National hauls is destined for export markets. That makes it linked directly to cross-border international trade flows.
For investors contemplating Canadian National as one of the exporter stocks to buy, this means a few key points.
Because the goods being transported are often priced in U.S. dollars, the Canadian producers of those goods become more competitive as the loonie softens. This supports the volumes traversing Canadian National’s network.
By extension, Canadian National’s significant U.S. operations and U.S.-dollar revenue provide a boost to revenue and profits.
Those benefits are outside of the already well-known reasons for investing in Canadian National.
Specifically, the company’s quarterly dividend, its wide defensive moat and impressive growth potential for long-term investors.
Magna International
Another intriguing option for investors looking for exporter stocks is Magna International (TSX:MG). Magna is one of the world’s largest auto-parts suppliers. The company designs and manufactures components, systems, and even complete vehicle assemblies for every major automaker on the planet.
Although it is headquartered and listed in Canada, Magna generates most of its revenue outside the country, particularly from U.S. and European customers. For investors looking at exporter stocks to invest in, this furthers the appeal of the stock.
In an environment where the loonie continues to soften, Magna gains price competitiveness over its foreign peers as its products become less expensive. This can more than offset the impact of higher tariffs in some markets.
For investors, the appeal of investing in Magna extends far beyond its potential as one of the exporter stocks to own. Magna’s diversified business makes it a hard-to-ignore option for investors seeking exposure to global manufacturing.
Throw in a quarterly dividend that carries a yield of 3.7%, and you have one of the best long-term options in the sector.
Bringing it together for investors considering exporter stocks
A softer loonie favours Canadian companies that sell heavily into foreign markets and collect U.S. dollar-based revenue. Both Canadian National and Magna appeal to this model in different ways.
For prospective investors seeking a portfolio that contains one or more exporter stocks, both Magna and Canadian National are great options to include in any well-diversified portfolio.
