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NAFTA Talks Remain at Negotiating Table: 5 Top Picks

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The United States and Canada failed to reach an agreement on Friday, Aug 31,deadline for the new NAFTA deal. In fact, the U.S. President threatened to end the tripartite trade deal and opted for a bilateral trade agreement with Mexico. Further, on Sep 1, he said that “there is no political necessity to keep Canada” in the new deal.

Amid tensions between President Trump and Canadian Prime Minister Justin Trudeau, officials from both countries are working toward striking a deal. With officials and ministers of Canada and Mexico showing optimism over possible progress from this deadlock, all is not lost for Canada, which has witnessed strong economic growth recently.

U.S.-Canada Talk it Out

On Aug 6, President Trump, at a campaign rally in Billings, MT, said that the NAFTA deal is being replaced with a trade deal between United States and Mexico. However, he added that the United States is “going to make a fairer deal with Canada.”

On Aug 31, the meeting between Trump and Trudeau ended with the White House telling Congress that the final NAFTA deal will be signed in the next 90 days with or without Canada. However, this incidentally gives the Trump administration less than 30 days to come to an agreement with Canada as text of any deal is required to be released 60 days prior to the President’s signature.

Earlier, the U.S. President was clearly in no mood to budge as he called the NAFTA talks “intense” and blamed Canada of “taking advantage” of his country. Canada, on the other hand is not sitting back as Canadian PM Trudeau said that Trump “doesn’t always follow the rules.” Trudeau said that his country will “not sign a deal rather than sign a bad deal for Canadians.”

However, all is not lost as Canadian Foreign Minister Chrystia Freeland after her meeting with U.S. Trade Representative Robert Lighthizer on Aug 6 said that both countries are “making progress” on the NAFTA deal. She added that all the concerned parties will reach a deal “which is good” for Canada, United States and Mexico.

Additionally, Mexican Economy Secretary Ildefonso Guajardo showed confidence that a possible solution will be reached by Aug 7. In fact, Guajardo said that “after Friday there will be white smoke.”

Canadian Economy Continues to Expand

While U.S. trade deficit posted its biggest jump in three years, monthly trade surplus of Canada with the United States was the largest in a decade.

Per the data by the U.S. Commerce Department on Sep 5, the U.S. trade deficit advanced 9.5% to $50.1 billion in July, from a revised figure of $45.7 billion in the preceding month. The U.S. trade deficit hit the highest level in the last five months, with the loss rising to 57.6% with Canada.

Meanwhile, Canada’s trade surplus with the United States increased from $4.1 billion in June to $5.3 billion in July, according to Statistics Canada. Canada’s trade surplus was its best since October 2008 with its biggest trading partner, the United States.

Strong trade surplus helped Canada’s GDP register its best quarterly increase in the past one year. Per Statistics Canada, Canadian economy registered an increase of 2.9% on an annualized rate in the second quarter of 2018. According to Statistics Canada, a 2.9% increase in exports contributed to strong GDP data.

5 Canadian Stocks to Buy Now

Following negotiations between officials of the United States and Canada,and the Canadian economy’s stable growth, Canada’s stocks are expected to garner investor attention.

In this context, we have selected five stocks that are expected to move north following these developments. These stocks also flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lululemon Athletica Inc. (LULU - Free Report) is an athletic apparel company.

This Vancouver-based company has a Zacks Rank #1. The company has expected earnings growth of 36.05% for the current year, higher than the industry’s projected return of 15.07%. The Zacks Consensus Estimate for the current year has improved 9.3% over the last 30 days.

Canada Goose Holdings Inc. (GOOS - Free Report) is a seller of premium outdoor apparel for men, women, youth, children and babies.

This Toronto-based company has a Zacks Rank #2. The company has expected earnings growth of 31.06% for the current year, higher than the industry’s projected return of 20.50%. The Zacks Consensus Estimate for the current year has improved 7.4% over the last 30 days.

Algonquin Power & Utilities Corp. (AQN - Free Report) is an operator of a portfolio of regulated and non-regulated generation, distribution, and transmission utility assets

This Oakville-based company has a Zacks Rank #2. The company has expected earnings growth of 16.67% for the current year, higher than the industry’s projected return of 5.62%. The Zacks Consensus Estimate for the current year has improved 3% over the last 30 days.

Mountain Province Diamonds Inc.  is involved on the mining and marketing of rough diamonds globally.

This Toronto-based company has a Zacks Rank #2. The company has expected earnings growth of 125% for the current year, higher than the industry’s projected return of 5.13%. The Zacks Consensus Estimate for the current year has improved more than 100% over the last 30 days.

Northern Dynasty Minerals Ltd. (NAK - Free Report) is a developer of mineral properties in the United States.

This Vancouver-based company has a Zacks Rank #2. The company has expected earnings growth of 82.35% for the current year, higher than the industry’s projected return of 11.54%. The Zacks Consensus Estimate for the current year has improved 75% over the last 30 days.

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