The Motley Fool

3 Stocks to Hold in a Slowdown

The S&P/TSX Composite Index shot up 116 points on May 27. This was a promising start to the week, as the TSX has battled volatility over the course of the month. Rising trade tensions between the U.S. and China have rattled global markets. On the domestic front, there is mixed sentiment as the energy and housing sectors battle headwinds.

Canada experienced a sharp slowdown in growth in 2018, and this has continued in the first months of 2019. Fortunately, the Bank of Canada and the Organization for Economic Co-operation and Development (OECD) are both calling for improved growth in the second half of the year.

Today, we are going to look at three stocks that should remain robust in the face of an economic slowdown. These offer a mix of growth and income as we move into the next decade.

Waste Connections

Waste Connections (TSX:WCN)(NYSE:WCN) is an Ontario-based company that is the third-largest integrated provider of traditional solid waste and recycling services in North America. Shares have climbed 26.7% in 2019 as of close on May 27. The stock is up 29% from the prior year.

The services that are provided by Waste Connections are needed no matter what kind of condition the economy is in. To add to this, Waste Connections has been a high performer over the past decade. In its most recent first-quarter 2019 report, the company reported revenue of $1.24 billion and posted 5% growth in solid waste growth. Both exceeded the high end of its original outlook.

In April, the company announced a quarterly dividend of $0.16 per share. This represents a modest 0.6% yield. However, Waste Connections has achieved dividend growth for nine consecutive years. This is a stock that can weather a slowdown or a potential pullback.

Brick Brewing

Brick Brewing (TSX:BRB) is an Ontario-based company engaged in the production, distribution, and sale of alcohol-based products, namely beer. Shares of Brick Brewing have climbed 32.1% in 2019 as of close on May 27. The stock is still down 3.9% from the prior year.

Alcohol consumption has remained steady through economic turbulence in the past. The so-called sin stocks tend to be solid bets in uncertain times, which makes Brick Brewing a solid target. In its recently concluded fiscal year, Brick Brewing saw net revenue increase 7.3% year over year to $53.7 million. Excluding one-time costs, EBITDA rose to $10.1 million, which was up 11.6% from the prior year. Its warehouse expansion and taproom projects are on track for completion by the third quarter of fiscal 2020.

The company last reaffirmed its quarterly dividend of $0.025 per share in April. This represents a 2.4% yield.

Canopy Growth

Canopy Growth (TSX:WEED)(NYSE:CGC) has emerged as the biggest cannabis player in Canada over the past several years. It boasts the largest market cap in the sector right now. Shares of Canopy have climbed 64.7% in 2019 as of close on May 27. The stock has soared 72% from the prior year.

The cannabis industry has spent decades in the dark, which raises questions over how it will perform in difficult economic times. Cannabis consumption has risen dramatically over the past decade, with the global recession seemingly having little impact on its upward trend. It is especially popular among younger demographics, whose purchasing power will only improve with time. Cannabis consumption is trending upward, and it is unlikely that broader headwinds will do anything to change that.

Canopy Growth is probably the most mature producer listed on the TSX and it has made promising moves to enhance its global footprint. Cannabis stocks are a little pricey after an early 2019 run up, but Canopy is a great bet for the long term.

You might be missing out on one of the biggest opportunities in Canadian investing history…

Marijuana was legalized across Canada on October 17th, and a little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

Besides making key partnerships with Facebook and Amazon, they’ve just made a game-changing deal with the Ontario government.

One grassroots Canadian company has already begun introducing this technology to the market – which is why legendary Canadian investor Iain Butler thinks they have a leg up on Amazon in this once-in-a-generation tech race.

This is the company we think you should strongly consider having in your portfolio if you want to position yourself wisely for the coming marijuana boom.

Learn More About This TSX Stock Now

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.