Death, Garbage and Power: The Perfect Trifecta to Beat a Slowdown

Here’s why these three Canadian stocks can shield you from a slowdown.

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Will there be a recession in 2020? Won’t there be a recession in 2020? As economists and finance experts keep debating this topic, the stock market has inched its way to new highs.

While the economy is still not out of the woods, there is no guarantee that a recession won’t occur in the near future. During such times, discerning investors would do well to shore up on stocks that are going to go about ‘business as usual’ irrespective of a recession or a slowdown.

Park Lawn Corporation (TSX:PLC) is the only stock on the TSX that allows investors to get in the business of death care. The company owns and operates 103 cemeteries, 95 funeral homes, and 38 crematoria across Canada and the United States. The stock has climbed over 40% since trading at $21.13 on December 10, 2018.

Its latest results showed that after adjusting for the impact of foreign exchange, revenue growth from comparable business units increased by 3.1% year over year and 3.7% for the quarter.

The adjusted EBITDA margin increased to 22.9% in Q3 2019 from 21.9% for the same period in 2018.

A recession may or may not be certain, but death definitely is. It’s business as usual for Park Lawn. PLC continues to grow via acquisitions as well.

In 2019, analysts expect sales to grow by 15.7% to $186.79 million, while revenue growth estimates for 2020 are estimated at 19.6%.

Waste Connections and Hydro One

Let’s assume that a slowdown is upon you. Here’s another stock that is somewhat recession proof. Waste Connections (TSX:WCN)(NYSE:WCN) is the premier provider of solid waste collection, transfer, recycling, and disposal services in mostly exclusive and secondary markets across the US and Canada.

The company reported very good numbers for the third quarter of 2019. Revenue was at $1.4 billion, up 10.3% from the same period in 2018.

Net income came in at $159.1 million, up from $150.8 million in 2018. For the nine months ended September 30, 2019, revenue was $4.027 billion, as compared to revenue of $3.661 billion in the year-ago period.

All these figures point to Waste Connections having a very good 2019. As the world continues to generate more garbage, the amount of business to Waste Connections is only going to increase. Analysts expect company sales to increase by 9% to $5.37 billion in 2019 and 7.4% in 2020.

This will also mean the company’s bottom line will grow by 5.2% in 2019 and 10.6% in 2020. Analysts tracking the stock expect it to gain 13% in market value over the next 12-months.

I had recommended that investors buy Hydro One (TSX:H) just under a month back as a safeguard to a slowdown. The stock has risen a little over 6% since then.

Hydro One is Ontario’s largest electricity transmission and distribution service provider and services around 26% of Ontario’s customers.

The company was owned by the federal government until the middle of this decade when it went public. Even today, 99% of its revenues are regulated which makes its revenues very predictable.

The company expects to grow by 4% this year, which seems quite likely when you take a look at their track record. Hydro One has a dividend yield of 3.9% which adds to its attractiveness. This is a great stock that can shield you from the brunt of a recession.

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 Aditya Raghunath has no position in any of the stocks mentioned.

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