A 30% decline versus the U.S. dollar led to jokes about “the Canadian peso” in the 1990s. We’re not quite at those levels, but we’re getting close after an 8.6% slide for the loonie in 2014 and 7.7% depreciation thus far in 2015. Since the end of 2013, the Canadian currency is down 15.6% in U.S. dollar terms.

We’re witnessing the culmination of a four-year trend that’s taken the loonie from a post–Great Recession high of USD1.06 to its present altitude of USD0.79. That’s a correction of about 25%.

Canada was recognized during and after the Great Recession for its fiscal strength, its bountiful resources and its gold-standard financial system. But now the talk is of the collapse of crude-oil prices, and a growing gap in interest rates based on Bank of Canada (BoC) and Federal Reserve monetary policies. Also, there’s the potential for a housing correction that some analysts suggest could rival the U.S. housing bust that started in 2007, precipitating the worst global financial crisis since the 1930s. 

Indeed, the Organization for Economic Cooperation and Development (OECD) joined a growing chorus when it warned of a slowdown in the Canadian economy.

In late March, BoC Governor Stephen Poloz warned of “atrocious” first-quarter economic growth. Capital Economics has forecast 1.5% gross domestic product expansion in 2015 and 1% in 2016. Canadian GDP rose 2.5% in 2014 following a 2% increase in 2013.

Then there’s the drop in oil prices. It’s cast a shadow on the health of the Canadian dollar. The world’s fifth-largest oil producer will certainly feel the impact of capital-spending cutbacks in western Canada. Oil and gas extraction, along with mining, accounts for about 30% of business investment.

Although direct employment by the industry is relatively small, about half of the jobs added in Canada in 2014 were in Alberta and Saskatchewan. 

So, yeah, Mr. Poloz is on to something when he speaks of economic atrocities.

Headline-grabbing adjectives and consensus forecasts help establish dramatic downside narratives. That’s not to say all is well. We’re not whistling past the graveyard.

And we do always bear in mind the wise words of our former colleague and famed commodities trader George Kleinman: “The trend is your friend.”

In other words, don’t fight the tape.

At the same time, Canadian Edge is focused on the long term. And times like these are when long-term opportunities reveal themselves.

Our top picks for new money—Ag Growth International Inc. (TSX: AFN, OTC: AGGZF) and TransForce Inc. (TSX: TFI, OTC: TFIFF)—are detailed in this month’s Best Buys feature.

Ag Growth is a great value right now because of an overreaction to its fourth-quarter results.

TransForce, a free cash flow machine, is poised to pare down debt after a period of acquisition-led expansion.

Beyond those two solid companies lie what we believe are four strong oil and gas names built to weather the commodity-price downturn, sustain their dividends and thrive once the cycle turns.

One of them, Crescent Point Energy Corp. (TSX: CPG, NYSE: CPG), yields 9% right now. Another, Peyto Exploration & Development Corp. (TSX: PEY, OTC: PEYUF), boasts an industry-leading cost structure that’s sustained strong profitability over the past decade-plus.

ARC Resources Ltd.’s (TSX: ARX, OTC: AETUF) costs continue to trend lower as production and reserves rise. And Vermilion Energy Inc. (TSX: VET, NYSE: VET) has a unique commodity profile that supports stable revenues.

We have more on the present state of the Canadian oil and gas industry in this month’s In Focus feature.

Our conclusions and our advice are predicated, again, on a long-term perspective that underlies our Canadian venture.

In Closing

Be sure to join me for the next installment of my monthly online chats with subscribers on Wednesday, April 29, 2015, at 2 p.m.

Go to www.InvestingDaily.com/Canadian-Edge/live-web-chats for more information and to sign up to receive an e-mail notification for the event.

I stick around to answer just about every question asked, so if there’s something on your mind that’s not addressed in an issue or on the Stock Talk forum, this is a great opportunity.

And thanks for reading Canadian Edge.