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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!
DOW 17,098.45 +18.88 0.11%
S&P 500 2,003.37 +6.63 0.33%
NASDAQ 4,580.2710 +22.5760 0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs