The TSX Index hasn’t been hit nearly as hard as the Nasdaq 100 or S&P 500. At the time of this writing, the tech- and growth-heavy Nasdaq 100 is down close to 13% from its recent highs, while the TSX Index is off just north of 4%. Despite the potential impact of tariffs on the Canadian economy, it’s somewhat comforting to see the TSX Index holding its own relatively well.
Of course, the Canadian stock market has been relatively cheaper than the U.S. indices for quite some time now. And while the relatively low multiples could help dampen the blow that tariffs will deal, the TSX Index certainly looks a bit “toppy” with a potential double-top technical pattern that may very well be in the works.
Only time will tell if the selling pain continues into year’s end. Either way, I think the value-rich TSX Index now has an even greater abundance of market bargains after the latest near-5% slide. In any case, the TSX Index has been virtually flat for the year to date. If you’re like many investors who have been loading up on U.S. stocks, though, odds are your portfolio is in the red for far in 2025 rather than in the grey or green.
In any case, I think a strong case could be made for the TSX Index outperforming the S&P 500 and Nasdaq 100 this year. Whether that’s by suffering less downside in a bear market year or by gaining ground in a flat year, perhaps Bank of Montreal (TSX:BMO) Chief Investment Strategist Brian Belski is right to stay bullish on Canada’s relatively cheap stock market.
Telus
How much worse can things get for Canadian telecoms? While there’s no relief in sight for the hard-hit industry, I think that it’s tough to ignore the magnitude of decline that’s already in the rearview. At its worst, shares of Telus (TSX:T) shed close to 44% from peak to trough — not exactly a garden-variety decline!
So much for a dividend darling! Year to date, though, things are starting to look up for the telecom, which has gained nearly 10%, while the TSX Index did nothing and the Nasdaq 100 fell off a cliff. Sure, there aren’t that many catalysts to get behind for the year. But sometimes, it just makes sense to brave an implosion with the long-term in mind.
Of course, Telus won’t turn a corner overnight, especially if a recession comes knocking by the summer months. In any case, it’s a mistake to think management won’t eventually find its way. And while only time will tell if Telus has finally hit rock-bottom, I must say I prefer the telecom over some of its peers that could have a tougher time bouncing back from a historic meltdown for the telecom stocks.
The 7.5% dividend yield seems too good to be true. But I actually view it as having staying power, especially as the firm makes steps on the road toward greater efficiency. Make no mistake.
Telus stock is a risk-on name here despite the low 0.7 beta. But if you plan to hold the name for years, I think that the risk/reward trade-off is on your side while the name goes for 1.6 times price-to-sales (P/S). Personally, I’d rather be in T stock than the TSX Index for the year. There’s quite a bit of upside if things go right for a change.