By Richard Young of Intelligence Report for InvestorPlaceCanadian investments are coming into favor as the specter of inflation rears its head and the fate of a U.S. recovery is anything but certain. Canada's financial system is stable, rich with natural resources and can keep plugging along even if consumers don't open up their wallets again anytime soon. Canada investments could be big next year for a few reasons: First is the financial angle. Canada's banks hold their residential mortgages. They do not sell them or repackage them for securitization. That has allowed the nation to avoid the major damage done to U.S. banks. Also, Canada is resource rich but politically stable -- a rare combination right now. For instance, 33 million Canadians produce nearly as much GDP every year as 142 million Russians -- but the Heritage Foundation's Index of Economic Freedom lists Canada as No. 7. By comparison, Russia ranked 143rd. And if by chance the U.S. pulls out of its tailspin, Canada will share in that success. After all, it is the United States' top import and export partner. Oil sands and natural gas from Canada will always find a market in the United States. But since Canada's resource export success isn't tied to the U.S. -- last year, Canada geared up its exports across the Pacific to resource-hungry China and Singapore -- that means America's recovery is a "nice to have" and not a "must have" for Canada to succeed next year. So where can you put your cash to share in the Canada boom? Here are seven investments to consider: CANADIAN NATIONAL RAILWAY I have recommended Canadian National Railway ( CNI - Get Report) as one of my top 10 overall investments for three of the past four months. My price charts show that the stock is nearing new highs, with more room to run. In July, the board announced the repurchase of 2 million more shares as part of the company's ongoing 15-million-share repurchase program. CNI's second-quarter earnings report saw double-digit growth in its coal, auto, metal and minerals and intermodal freight traffic. As Canada continues to power through the economic downturn, rail stocks moving commodities will continue to fare well. CANADIAN PACIFIC RAILWAY Another great Canada rail stock is Canadian Pacific Railway ( CP - Get Report). In this year's second quarter, Canadian Pacific moved 22.4% more freight than it did in the second quarter of last year. CP moved the freight for 9.7% less per unit, but the volume more than offset the lowered pricing. CP's excellent performance in the second quarter was powered by 93.7% growth in the amount of sulfur and fertilizers it moved during the quarter compared with last year. Recent resistance near $60 is the last stopping point before prerecession levels near $70.
More From Investor Place
|Dividend Stocks to Grow Your Nest Egg|
|7 Expert Stock Picks for Every InvestorThere|
|GameChanger Stocks to Build Your Wealth|