2 TSX Stocks Safer for Investing in a Recession

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Persistently high inflation, rising interest rates and uncertainty point to a slowdown in the economy. A recession may or may not arrive in 2023. However, investors can hedge their portfolios by adding stocks Consumer organizations. Although consumer companies are not completely immune to the economic crisis, they have performed relatively well compared to other sectors and can stabilize your portfolio.

With this background, let’s look at two Canadian stocks From a consumer space that can reduce the downside risk of your portfolio and beat the benchmark index in a sluggish environment.

Food Gooch-tart

With low risk business, Food Gooch-tart (TSX:ATD) stock can be a great addition to your portfolio in the midst of a recession. Its defensive business will add stability to your portfolio. Also, investors can benefit from its growing dividend and its ability to grow sales and earnings quickly.

Couche-Tard’s revenue has grown at a CAGR (compound annual growth rate) of 11% over the past decade. Due to higher sales, Couche-Tard’s EPS (earnings per share) grew at a CAGR of 20% during the same period. The company’s growing revenue base has allowed it to increase returns to its shareholders through higher dividend payouts. Notably, its dividend has grown at a CAGR of 24.7% over the last 10 years.

Overall, its value offerings, solid store presence in Canada, focus on expanding its footprint in the US, and strategic acquisitions will boost its revenue in the coming quarters. Also, it will reduce its revenue through higher sales and cost efficiency. Also, its solid balance sheet with low-cost debt provides the company with substantial investment potential to fuel future growth.


Next is  shares Dollarama (TSX:DOL), which has the potential to perform well even in challenging operating environments. For example, Dollarama stock is up about 37% in a year, despite macro headwinds and outperforming the S&P/TSX composite index.

Its superior performance stems from a comprehensive offering of consumer products, a compelling pricing strategy and a large store base. It has stores in all 10 provinces of Canada, which gives it a competitive advantage over peers and is critical to its success.

Like Couche-Tard, Dollarama’s top and bottom lines have grown at double-digit rates over the past decade. Meanwhile, its trading momentum has been sustained in the current financial year amid a high inflationary environment.

The Canadian value retailer’s comparable store sales rose 10.8% in the third quarter of fiscal 2023. Also, its EPS increased by 14.8%. Thanks to the strength in its business, Dollarama expects its comparable sales to grow at a healthy pace in fiscal 2023.

Overall, Dollarama’s compelling value proposition and growing store base helps deliver solid sales and revenue even in an economic downturn. Also, it focuses on value-enhancing stock buybacks and annual dividend growth.

bottom line

These companies’ recession-resistant businesses and their value proposition better position them than the benchmark index in economic downturns. It is worth highlighting that despite being a low-risk business, the shares of these companies appreciated greatly and outperformed the broader markets.

Position 2 TSX Stocks Are Safe to Invest in a Recession appeared first Motley Fool Canada.

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Further reading

Stupid contributor Seneca Nahata No position in any of the stocks mentioned. The motley fool has designations and suggests alimentation cooch-tart. A motley fool Disclosure Policy.


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