Author: Christopher Liew CFA

Canada’s primary stock exchange posted a record high in January 2025, but has lost all gains since. The negative market sentiment persists in April due to U.S. President Donald Trump’s barrage of tariff threats. Fortunately, some TSX stocks are well-positioned to outperform despite a bear market.

Assuming I have $300 free cash today, I’d invest it in a soon-to-be high growth stock. Besides reporting record results in Q1 fiscal 2025, Blackline Safety (TSX:BLN) achieved the “Rule of 40.” In the Software-as-a-Service (SaaS) industry, it means the sum of a company’s annual revenue growth rate and profit margin is 40% or higher. It also indicates a balance between growth and profitability.

Uniquely positioned

Calgary-based Blackline Safety operates in the safety technology industry. The $548 million SaaS company provides critical safety solutions in homes and workplaces. It caters to businesses across the oil and gas, manufacturing, utilities, chemical processing, emergency response, and other industries.

The global industrial safety market is forecasted to grow from US$7.7 billion in 2025 to US$ 10.6 billion by 2030 (a 6.5% compound annual growth rate). According to Markets and Markets Research, the high demand for reliable safety systems to protect personnel and assets, as well as stringent safety regulations, will drive growth.

Blackline Safety has become a trusted partner of prominent companies in enhancing the safety of workers in various environments. Furthermore, the growing acceptance of workplace safety standards in emerging economies and the rising use of Industrial Internet of Things (IIoT) technologies creates significant opportunities.

Record-breaking quarter

In the three months ending January 31, 2025, Blackline’s total revenue (product and service) grew 43% to $17.8 million compared to Q1 fiscal 2024. The net loss thinned 80% year-over-year to $1.1 million. Its CEO and Chairman, Cody Slater, said it was another record-breaking quarter.

The feat was the 32nd consecutive quarter of year-over-year revenue growth. Slater credits the robust market adoption of Blackline’s industry-transforming connected safety solutions for the impressive results to start fiscal 2025. “Annual Recurring Revenue (ARR) reached a record $70.9 million, reflecting a 31% year-over-year increase and highlighting the strength of our Hardware-Enabled SaaS business model,” he added.

Likewise, EBITDA (earnings before interest, taxes, depreciation, and amortization) in the same quarter reached $2.1 million following the positive EBITDAs in Q3 and Q4 fiscal 2024. The strong global customer demand reinforced Blackline’s ability to scale profitably and execute its long-term strategic vision.

Slater further said, “Blackline Safety achieved the Rule of 40 metric in Q1, the gold standard for SaaS companies, with revenue growth plus adjusted EBITDA margin reaching 47. We see this as a strong milestone for the Company and a true validation of our business model.”

Management acknowledges the uncertainty surrounding tariffs, although the potential impact on revenue and earnings is generally short-term. Blackline has adequate inventory to fulfill or meet orders, including those of U.S. customers.

Buy now before the takeoff.

Blackline Safety trades at $6.52 per share (-4.6% year-to-date) and carries a buy rating from market analysts. Their 12-month price target for BLS stock is between $8.86 (average) and $10 (high). The potential return on a $300 investment in one year could be from 35.9% to 53.4%. Over the long term, Blackline expects further customer growth and higher market share.

A wealth legacy sounds complex but it’s a concept that creates financial success. In stock investing, you use money to accumulate shares to build wealth from investment income. The solid foundation becomes not only financial wealth over time but lasting wealth.

Invest in the financial services sector if you want to create a wealth legacy through Canada’s primary stock exchange. It’s a heavyweight sector that accounts for 33% of the S&P/TSX Composite Index. The constituents include Canadian banks, insurance companies, and asset managers.

Do you need substantial capital to invest in financial services stocks? Not really. You can start with $8,500. Let it compound exponentially over a longer investment horizon. It can be your wealth legacy in the future.

Sector performance

Data from S&P Global shows that Canadian financial services only lost in one of the last five years. It delivered positive total returns in 2020 (+1.62%), 2021 (+36.5%), 2023 (+13.7%), and 2024 (+30.1%). In 2022 (-9.4%), inflation peaked to 8.1% in June leading to a 0.25% increase in the Bank of Canada’s policy rate to 5% a year later.

The banking sector is solid as a rock, particularly the five Big Banks. These giant lenders have dividend track records of more than 100 years. Besides sound financial health and high capital levels, the regulatory framework ensures a resilient financial system.

Impressive dividend track record

The Canadian Imperial Bank of Commerce (TSX:CM) is Canada’s fifth-largest financial institution by market capitalization. At $80.66 per share, this $75.8 billion lender pays a hefty 4.8% dividend. An $8,500 investment will compound or grow 319.7% to $35,675.30 in 30 years.

The example illustrates the power of compounding through reinvesting the quarterly dividend payouts. Regarding dividend history, CIBC has been paying dividends since 1868. The overall return in the last five years is 173%-plus or a 22.2% compound annual growth rate (CAGR).

In Q1 fiscal 2025 (three months ending January 31, 2025), revenue and net income rose 17% and 26% respectively to $7.3 billion and $2.2 billion versus Q1 fiscal 2024. Victor G. Dodig, President and CEO of CIBC, said the diversified business platform, robust capital position, and strong credit quality form the foundation to deliver for stakeholders in 2025 and beyond. However, he expects volatility in the cross-border business environment.

Screaming buy

On the asset management side, Power Corporation of Canada (TSX:POW) stands out for its resiliency. At $50.78 per share, current investors enjoy a 14.6%-plus market-beating year-to-date gain, notwithstanding the tariff chaos. If you invest today, the dividend yield is a lucrative 4.8% (recently increasing 10%).

The core holdings of this $32.6 billion diversified international management and holding company are in insurance, retirement, wealth management and investment businesses. Its two subsidiaries, both TSX companies, are the primary earnings drivers.

In Q4 2024, net earnings from continuing operations climbed 142.3% year-over-year to $933 million. The $3.6 billion asset monetization over the last five years supported investments and funded share buybacks. According to management, Power is well-positioned to continue generating attractive returns through Great-West Lifeco and IGM Financial.

Wealth creation

CIBC and Power Corporation of Canada are a formidable combination for wealth creation. In an extended holding period, the wealth could endure, prosper, and be the legacy you leave behind for succeeding generations.

The equities markets went haywire on April 2, 2025, when U.S. president Donald Trump unveiled his sweeping tariffs on the rest of the world. Wall Street’s major indexes registered their worst weeks since March 2020 and gave up gains from the post-election rally.

As of April 4, Canada’s primary stock exchange upped its year-to-date loss to -6.21%. However, the TSX has contained the impact better than the Nasdaq Composite (-19.9%), S&P 500 (-13.7%), and the Dow Jones (-9.9%). Also, a day after Trump’s tariffs took effect, the loonie gained 1% versus the greenback (1.4090 per U.S. dollar, or USD). It was near its four-month high against its U.S. counterpart.

According to foreign exchange traders, the Canadian dollar closed higher than the USD for a fifth straight week. While the trade war is widening, Canada avoided fresh tariffs, especially on goods that comply with the United States-Mexico-Canada Agreement (USMCA).

Weak USD

A weak USD can boost Canadian stocks, particularly firms that derive revenues in foreign currency or with large international sales. Ian de Verteuil, an analyst at CIBC Capital Markets, said, “With most of the revenue for the S&P/TSX booked outside of Canada, this should provide earnings tailwinds throughout 2025.”

“The companies with large non-Canadian revenues, but which report in Canadian dollars are likely the winners,” de Verteuil added. If you’re adjusting your portfolio with the latest currency movement, Sun Life Financial (TSX:SLF) is one of the companies that generated significant non-Canadian revenues in 2024.

The $44.26 billion financial services company and iconic life insurer expect the emerging economies and fast-growing Asian markets to provide higher returns and robust growth than the North American markets. Sun Life is popular in China, Hong Kong, India, Indonesia, the Philippines, and soon in Malaysia and Vietnam. The earnings from the Asia business increased 21% over the last few years.

In 2024, Sun Life’s underlying net income rose 3% to $3.86 billion compared to 2023. Its president and chief executive officer (CEO), Kevin Strain, said the balanced and diversified business strategy positions Sun Life for long-term growth. According to Sun Life, diversification will be key as markets face trade war fears. If you invest today, SLF trades at $77.55 per share and pays an attractive 4.33% dividend (quarterly payout).

Dropping loonie

In a reverse situation, when the Canadian dollar depreciates, invest in companies generating revenues in U.S. dollars, but operation costs are in Canadian dollars. Imperial Oil (TSX:IMO) is a crude oil and natural gas producer and operates three refineries in Canada.

Moreover, American oil & gas giant ExxonMobil has a 69.6% ownership stake in the $45.95 billion Canadian integrated energy company. As of this writing, IMO is in positive territory. At $90.27 per share, the large-cap stock is up +2.68% year to date amid the tariff chaos. It pays a decent and safe 3.19% dividend (26.58% payout ratio).

On April 4, 2025, RBC Capital Markets maintained its “sector perform” rating for IMO, with a price target of $101 (+11.9%).

Under pressure

Some TSX stocks benefit from an appreciating Canadian dollar, while others rise when it is weak. However, investors must be cautious in 2025 because the loonie will be under pressure due to trade uncertainty.