The Canadian dollar has been in a bit of a malaise in recent weeks, which recently sinks to around US $ 0.71 or so. Undoubtedly, while the Bank of Canada continues to lower the interest rates in addition to the FED, the Loonie may have no chance of strengthening the US dollar versus. And with the Canadian economy that is confronted with challenges by administration of rates and pressure on the oil price, there is certainly potential for more pain in the wages before the next large bounce.
Anyway, different experts think that the Loonie may have a bit of a break, because it seems to get a few cents that the new year is going. And although the Canadian economy seems to be more confronted than its fair share of headwind, I would not be too surprised to see the Loonie rise to the US $ 0.73-0.75 series in the following summer. Indeed, a profit of a few cents for almost a nickel may not seem that much, but it can mean a lot for the companies that make the most, if not all, their money on this side of the border.
Who knows? If the Bank of Canada first started its cycle of the rate saving, this may also be the first to press the pause button. Of course there is also a chance that the Fed will take on a slightly more ragged tilt before the Bank of Canada does so. And if that happens, there is the risk of more pain for the Canadian dollar. Anyway, here are two shares that I would check out, because the US dollar will weaken a bit the next year versus the Loonie.
Magna International
Magna International (TSX: MG) is a Canadian car manufacturer that starts to pick up speed, now more than 26% in the past three months. Undoubtedly, the rate fears were probably exaggerated, and with so much damage caused by all the shares, investors have more reason to be constructive, especially because the car scene seems to start again.
With a decent quarter and sufficient management confidence to increase his guidance, I am inclined to see MG shares as less a value of value and more as a deep-rooted game. The share acts at 11.1 times backlog of price-to-win (p/e) or about 8 times ahead. With a nice dividend yield of 4.2% and the resources to benefit much from a stronger Canadian dollar, I think the path of the least resistance in 2026 can be higher.
A stronger Canadian dollar would indeed help to lower input costs and add the margins of the company, which also benefit from the current efforts for operational efficiency.
Fortis
Fortis (TSX: FTS) is another Canadian stock that would not mind finding a stronger wage. Of course the utility does business on both sides of the border. However, a stronger wages would allow the company a little more purchasing power as it continues to start its capital expenditure plan. Not to mention a stronger wage of the US Dollar would seem even less substantial.
Anyway, I see Fortis as a steady dividend payer who is worth buying at 20.3 times with p/e with its 3.6% dividend yield. The last quarter was incredibly good, and it might be just the beginning because the dividend seems to continue to invest in his future growth.
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