If you’re one of many TFSA investors who’s yet to put your 2021 contribution of $6,000 to work in the markets, now is as good a time as any while value still exists. We’re in a frothy market right now, but it could get much frothier over the coming months. And while we’re overdue for a correction, there’s no sense in timing when the next pullback will be, because, odds are, you’ll miss the bottom. You’ll also run the risk of missing out on a rally that could dwarf the next sell-off.
As someone wise once said, to get superior results over time, you should maximize your time in the market, rather than timing the market! Of course, various folks may tout that they know what Mr. Market will do next, but they don’t really know.
Nobody, not even Warren Buffett, knows what markets will do over the short term. He and many other investment legends know that markets tend to go up over prolonged periods of time. And that’s why it’s a good idea to get started investing as soon as possible, especially in today’s low-rate environment, where the opportunity costs of holding cash and cash equivalents have never been higher.
For TFSA investors looking to buy and hold through the generations (or at least for decades at a time), one must look to firms with wide moats. In an era of technological disruption, the concept of moat erosion has never been more relevant to investors. Firms leveraging technologies are hungry to steal the lunch away from the incumbents, and they’ll probably stop at nothing.
While wide moats are harder to come by these days, they still exist, and they’re worth stashing and forgetting in your TFSA growth fund. Consider CN Rail (TSX:CNR)(NYSE:CNI), TFI International (TSX:TFII), and Cargojet (TSX:CJT), three very different transportation stocks that are unlikely to see their share of economic profits erode over prolonged periods of time.
CN Rail is a legendary railway capable of preserving and building wealth over the long haul. Just ask Bill Gates! The company has an absurdly wide moat, and it’s not about to suffer from moat erosion anytime soon. If anything, the rise of tech should benefit CN Rail’s top line over time, as derailments and rail efficiency stand to improve over the ages.
Looking ahead, the bar is set low by analysts, as too is the stock’s valuation. I’d look to back up the truck on shares with a big chunk of your TFSA proceeds right here ahead of the “roaring 20s.”
TFI is a stock that keeps on trucking. I’ve been an advocate of buying and holding shares for the long haul, noting that the firm’s transport and logistics services would likely continue to be in high demand, regardless of the economic environment.
More recently, TFI struck a deal to buy UPS Freight in a deal worth $800 million. Shares of TFI haven’t looked back, and I think they’re headed to even higher heights, as the COVID-19 crisis ends and the firm looks to build upon its newfound strength. Management has suffered through operational challenges in the past, and they’ve learned a great deal. TFI is my favourite trucking stock. I wouldn’t hesitate to recommend it after its recent run.
Cargojet is a Canadian cargo airline that’s been riding high on pandemic tailwinds. Despite being a fairly small firm with a mere $3.3 billion market cap, the airline has a moat in its pricy fleet of cargo-carrying aircraft. Not only does the firm possess assets that make it tougher for new entrants to take share from the fast-growing firm, but Cargojet also has the expertise to make optimal use of its assets.
The stock is anything but cheap here, but I still it’s worth nibbling with the intention of buying more on a pullback. The demand for e-commerce is likely to remain strong for years, and CJT stock is a great way to play the trend. The stock is down 23%. If it falls further, I’d get ready to pounce with your TFSA funds.
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Fool contributor Joey Frenette owns shares of Canadian National Railway. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of and recommends Canadian National Railway and CARGOJET INC. The Motley Fool recommends Canadian National Railway.
The post TFSA Investors: 3 Top Canadian Stocks I’d Buy Right Now and Hold Forever appeared first on The Motley Fool Canada.
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