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2 Forever Stocks to Make Your TFSA Unshakable

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You don’t need to be an investment guru to get good results from the markets. What you do need is patience, discipline, a long-term time horizon, and enough confidence in your abilities to stay the course in spite of any bumps in the road that will inevitably present themselves.

Not everybody has the right temperament to do well in the markets, but if you’ve got what it takes, here are three proven outperformers that deserve a permanent spot in your TFSA.

Alimentation Couche-Tard (TSX:ATD.B)

Couche-Tard is arguably the best stock that’s exclusive to the TSX. The convenience store kingpin that’s relied on the growth-by-acquisition model has continued to experience astounding EPS growth numbers in spite of the ever-growing market cap, which is now north of $44 billion.

In spite of the massive size of the company, there are still decades’ worth of double-digit top- and bottom-line growth thanks to the highly fragmented global industry and the highly capable management team that’s probably the best in the world at scaling up its c-store network in the most efficient way possible.

The latest quarter (Q3 fiscal 2019) saw adjusted EPS numbers fall short of expectations ($1.08 vs. $1.19), but still doubling the EPS that was posted over the same period last year. U.S. fuel margins improved substantially, and strong same-store sales growth (SSSG) numbers were applaud-worthy thanks in part to the company’s “spring cleaning” of its existing stores during the stock’s prolonged period of consolidation.

When it comes to growth, Couche-Tard is a stud. Even after the stock’s big run, shares still only trade at 17.1 times trailing earnings, which is quite ridiculous considering the low-risk growth profile you’re getting from the c-store roll-up that’s showing no signs of slowing down.

There’s still plenty of EPS growth on the horizon, and with that, expect more multiple compression over the next year or so. As debt falls to levels that’ll warrant more M&A moves, expect the stock to keep on flying higher, as growth-savvy investors flock back to the name.

Fortis (TSX:FTS)(NYSE:FTS)

Sticking with the “boring” theme, we have Fortis, a highly regulated utility that yields 3.6%. Although the 20 trailing P/E multiple seems too rich for a company that’s growing at a mid-single-digit rate, I’d argue that the premium is well worth paying, especially if you’re at all concerned about how your portfolio will fair come the next recession.

Sure, you can find more rewarding businesses out there for a cheaper price, but in terms of stability, few other investments out there (other than fixed-income securities) come even close.

The company recently sold its 51% stake in the Waneta Expansion project for $1 billion, which will help finance Fortis’s capital growth plan. With many growth projects in the pipeline, management expects 6% to be the base growth level through 2023. Investors can expect a similar magnitude of dividend hikes, and given the firm’s highly predictable nature, I’d say the 20 P/E is well worth the price of admission if you seek solid returns relative to the low degree of risk you’ll end up taking on.

Fortis is a powerhouse, and should a recession come to be in the next three years; you’ll be way ahead of the pack if Fortis is a core holding in your TFSA.

Foolish takeaway

You don’t need to be an expert portfolio manager to construct a robust TFSA that’ll be unshakable in the event of a recession. Both Couche-Tard and Fortis are high-quality businesses with above-average EPS growth profiles. Each stock also has a low correlation to the broader markets, which is favourable for those who’ll be looking for shelter when volatility prevails.

Stay hungry. Stay Foolish.

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Fool contributor Joey Frenette owns shares of ALIMENTATION COUCHE-TARD INC and FORTIS INC. Couche-Tard is a recommendation of Stock Advisor Canada.

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