With uncertainty ratcheting up in a number of areas around the globe, investors have been reacting in fairly predictable fashion. Last week, cannabis stocks rallied briefly after a rout the previous week before falling back again, while classic safe havens such as precious metals and utilities saw some improvement in a fairly flat market.
However, the jitters may give way to a serious correction at a moment’s notice, so let’s see what’s performing best on the TSX amid heightening risk.
Risk is out and gold is rising
Cannabis briefly rallied after the HEXO-led massacre, but even Aphria couldn’t keep the sector positive by the end of last week. Anyone paying close attention to that Q1 no doubt saw it as perhaps less exemplary than it first looked, which explains why that stock in particular finished on a low note.
Looking across the board there’s a lot of red ink, though Horizons Marijuana Life Sciences ETF managed to end the week overall positive, if only by a couple of points.
Gold has been rising slightly, but is struggling to peep over the parapet of a fairly flat TSX, even with all the uncertainty facing investors. Still, Canadian-traded stocks did somewhat better than the U.S. markets, which were down at the end of a fraught week in American politics.
ETFS Physical Palladium Shares ETF is up over 10%, however, beating just about everything in a fairly level week. North American Palladium has been getting a lot of attention of late, offering a rare pure play in this booming metal as well as a squeaky-clean balance sheet and positive outlook.
Renewables continue to trend higher
Stocks hitting 52-week highs were in shorter supply than stocks falling to year-long lows over the weekend. Brookfield Renewable Partners has been popular, shooting to a year-long high and continuing the trend towards green energy. On the other end of the scale, stocks like Roots are flashing a sale signal, with high-end retail joining cannabis as a less-than-safe investment topic in the current climate.
Brookfield is one of the best green energy stocks on the market, representing defensive energy production and reliable passive income in the green economy space. Its stock has jumped over 10% since last month, as investors have cottoned on to its central position in the green energy trend, plus its position as a defensive play for both income and growth.
Speaking of income, Brookfield’s yield of 4.86% is suitably meaty, making this a solid first stop for dividends, not just in its field but on the TSX as a whole. That dividend yield also beats peers Algonquin Power & Utilities’s current 4.16%, as well as Northland Power’s tasty 4.63%.
The bottom line
Cannabis is down, gold is up, and renewables are hot. While there may be tempting bargains doing the rounds in the coming weeks, this may be no time to add risk to a stock portfolio. Instead, with a fairly flat TSX reacting to increased risk, investors should play to the market’s strengths at the moment and double down on safety with Brookfield offering strong upside and defensive income.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. Brookfield Renewable Partners is a recommendation of Dividend Investor Canada.