This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Falling Canadian Dollar Boosts Appeal of Canadian Stocks

NEW YORK (TheStreet) -- Recent reports show the American economy recovering, but Canada is not doing as well. Because Canada's economy is dependent on natural resources, it has suffered as prices of many commodities have failed to recover from the Great Recession.

That said, for investors with a long-term outlook, there are compelling reasons to consider Canadian stocks .

The most important is that there are a number of excellent publicly traded companies in Canada.

Prem Watsa, who is known as "The Warren Buffett of Canada," has many of these companies in the portfolio of Fairfax Financial Holdings (FFH:Toronto) (FRFHF:Pink Sheets), the investment firm he heads. Like Buffett, he is a value investor who takes long-term positions. So devoted is Watsa to this investment style that he named his son after Ben Graham, the intellectual force behind value investing.

To the delight of the shareholders, Fairfax Financial is up more than 30% for the first three quarters of 2013, according to a Bloomberg report published by Ottawa Citizen. Over the past 20 years it has posted Buffett-type returns with an average rate of 13%, the report said. At present, Fairfax Financial has positions in Canadian firms such as Resolute Forest Products (RFP), BCE (BCE) and BlackBerry (BBRY).

Many Canadian stocks are also solid enough to pay above-average dividends.

The average dividend for a member of the S&P 500 is around 1.9%. BCE, a telecommunications firm, has a dividend of more than 5%. The Bank of Montreal (BMO) has a dividend yield of 4.4%, while Brookfield Office Properties Canada (BOXC), a real estate investment trust headquartered in Toronto, has a yield of 4.5%.

The next factor that should lead investors "north of the border" is that the "loonie," or Canadian dollar, is at a three-year low. A Goldman Sachs (GS) report predicts that it will fall even more in 2014, according to CBC News. That makes every asset priced in Canadian dollars that much cheaper to foreign investors. As Canada is very hospitable to buyers from abroad, assets should rise in value over the long term to outsiders taking advantage of the discount.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $124.75 0.00%
FB $80.78 0.00%
GOOG $524.05 0.00%
TSLA $206.79 0.00%
YHOO $44.45 0.00%


DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs