How Canadian Investors Can Hedge Their Portfolios Now #CanadaFinance

Written by Amy Legate-Wolfe at The Motley Fool Canada

Trade tensions are heating up again, and investors are taking notice. Canada and the United States continue to clash over tariffs, with new policies threaten to impact key industries. When tariffs rise, the cost of doing business increases. Companies that depend on cross-border trade may struggle with higher expenses, supply chain delays, and reduced profit margins. This kind of uncertainty can make the stock market more volatile, leaving investors wondering how to protect their portfolios.

While no investment is entirely immune to market swings, certain stocks tend to hold up better when trade disruptions occur. The key is finding businesses that either benefit from market uncertainty or operate largely within Canada, reducing exposure to international risk. Precious metals have long been a safe-haven investment in times of economic turmoil, making gold- and silver-related stocks appealing. Another strategy is investing in companies that help businesses navigate supply chain challenges, which become more common when tariffs disrupt trade.

For Canadian investors looking to hedge against tariff-related risks, two strong options on the TSX stand out. Those are Kinaxis (TSX:KXS) and Wheaton Precious Metals (TSX:WPM). First, Kinaxis provides supply chain management software that helps businesses adapt to trade disruptions. Meanwhile Wheaton Precious Metals gives investors exposure to gold and silver – two assets that tend to gain value when economic uncertainty rises.

Kinaxis is a supply chain management software company based in Ottawa. It provides cloud-based services that help businesses plan, analyze, and respond to supply chain challenges in real time. When tariffs increase, companies need to make quick adjustments to sourcing and logistics. That’s where Kinaxis comes in. By using its software, businesses can predict disruptions, shift suppliers, and optimize supply chains, helping remain profitable even in difficult conditions.

The company’s business model is built around recurring revenue, primarily through its Software-as-a-Service (SaaS) subscriptions. This provides stability, as customers typically stay locked into long-term contracts. Companies across industries, from manufacturing to pharmaceuticals, use Kinaxis to manage their operations efficiently. As trade becomes more complex, demand for Kinaxis’ services is likely to increase.

Its latest earnings report for Q3 2024 showed strong growth. Total revenue hit US$121.5 million, up 12% from the same period the previous year. The company’s SaaS revenue grew by 16% to US$78.6 million. While adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 32% to over US$30 million. These numbers highlight how Kinaxis continues to expand, even as businesses face increasing trade pressures. With a market capitalization well above $200 million, it remains a solid pick for investors looking to hedge against trade-related risks.