One stock to beat Trump’s trade war

Bargain-basement CGI largely insulated from tariff shock

The trade war is on. It’s just not clear from one day to the next which products are affected and at what rate. This is the most botched rollout of a major economic plan that we’ve seen in years, if ever. No one has a clue, apparently including President Trump, what tomorrow will bring or where the end game is heading.

And the question everyone is asking is: How long will this go on?

In his recent address to Congress, the president gave the impression he is in it for the long haul. Yes, there will be “disturbances” along the way, he acknowledged. But his message to Americans was to stick it out. The end result will be a new “golden age,” as trillions of investment dollars pour in, creating millions of new jobs. He repeated that theme during his so-called “Liberation Day” announcement from the White House on April 2, detailing a baseline worldwide 10% tariff regime, higher reciprocal tariffs for other countries, as well as a 25% tariff on all foreign-made vehicles.

Meanwhile, industry leaders in both Canada and the U.S. were trying to figure out the precise implications of the tariffs, and whether we should be preparing for a temporary conflict or years-long trench warfare.

The stock markets suggest investors believe the war won’t end soon. Markets are gyrating with increased volatility with each new twist and turn from the White House. But at times like this, it’s important to remember that there’s never a crisis without opportunity.

During the Great Financial Recession of 2007-2009, banking stocks became ridiculously cheap as investors panicked after seeing the likes of Bear Stearns and Lehman Brothers go down. At one stage, Bank of Montreal shares were offering an 11% yield as investors anticipated a dividend cut. It never happened and the stock eventually rebounded.

The same thing will probably happen this time. Some first-rate companies with little or no direct exposure to tariffs will see big declines in their share prices. I can’t predict when they will hit bottom and start to rally, because the length and severity of Trump’s folly isn’t yet clear. But this phase will eventually pass, and when it does there will be rewards for investors.

For now, my suggestion is to look for quality companies that have little or no direct exposure to tariffs but whose price has recently dropped. One example is CGI Inc. In mid-February, its shares hit an all-time high. Then they started to tumble for no obvious reason beyond profit-taking and rising investor fears of a recession as tariff threats flew from Washington.

I see this as a buying opportunity for those who don’t have a position in this well-managed company. Here is an update on the stock, which I originally recommended in my Internet Wealth Builder newsletter in 2012.

CGI Inc. insulated from trade war

CGI Inc. (TSX: GIB.A), based in Montreal, is one of the largest independent information technology and business process services firms in the world. The company, founded in 1976, delivers an end-to-end portfolio of capabilities, from IT and business consulting to systems integration, outsourcing services, and intellectual property solutions. It employs about 91,000 professionals in offices and delivery centres across the Americas, Europe, and the Asia Pacific region.

The stock hit an all-time high of $175.35 in mid-February but has been on a downward trend since. It closed recently at $146.00, down 16% from its high.

The company recently reported first quarter 2025 results (to Jan. 31) that were in line with analysts’ expectations. Revenue was almost $3.8 billion, up $182.2 million from the same period a year ago. Adjusted net earnings were $449 million ($1.97 per diluted share) compared with $427.2 million ($1.83 per share) last year. The company reported a backlog of $29.76 billion, or twice annual revenue.

“Our positioning as a trusted advisor for helping clients achieve outcomes from digitization – including through AI – contributed to bookings of over $4.1 billion, or 110% of revenue,” said CEO François Boulanger.

“The acceleration of our M&A investments continues to expand our client relationships and capabilities to drive stakeholder value this year and for the long-term. Importantly, cash from operations reached a new high of nearly $650 million in the quarter, which further strengthens our capacity to fuel our build and buy profitable growth strategy for the future.”

CGI has historically grown by acquisition. The latest was the closure of a deal to acquire BJSS, a leading U.K.-based technology and engineering consultancy. The company said the deal “aligns with CGI’s strategy to expand its consulting-led services and drive innovation in cloud, AI, data analytics, and software engineering for commercial and public sector clients.”

The company implemented a quarterly dividend of $0.15 per share, effective with the November payment. Also, it is seeking TSX approval for a normal course issuer bid that would allow it to repurchase up to 10% of its outstanding public float over the next 12 months.

CGI does not appear to have any significant exposure to the trade war. The company is well-diversified internationally and its business does not involve the export of physical goods. The share price may be temporarily sideswiped by the overall drag on the TSX and by recession fears, but I expect the stock to rebound as investors sort their way through which Canadian companies are vulnerable to tariffs and which are not.

For growth investors, this is an opportunity to acquire shares in a strong global company at a discounted price. As always, check with your advisor before investing to ensure the stock aligns with your financial objectives and risk-tolerance level.

Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.

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Notes and Disclaimer

Content © 2025 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.

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