The TSX Index flirted with correction territory last week, slipping 11.5% before staging a slight comeback. On Friday afternoon, the TSX pared its losses to 9.37%, narrowly escaping the technical definition of a correction.
The Dow Jones Industrial Average fared much worse, sliding 12.36% from its closing level on the 21st by market close on February 28.
The massive selloff in global markets has been unprecedented. With the Dow shedding 3,600 points in a single week, it’s been one of the fastest stock market crashes of all time. Asian, North American and European markets are all down from previous highs, and some say the worst is yet to come.
In times like these, it’s easy to get spooked. Yet the most severe market crashes can be the best buying opportunities. As Warren Buffett says, investors do well to “Be fearful when others are greedy, and greedy when others are fearful.” With that in mind, here are three TSX index stocks that could be great buys during this correction.
However, its raw size isn’t its most admirable characteristic, but rather its track record of getting through market downturns and recessions without a scratch.
In 2008 and 2009, when the global recession was raging hard, Fortis increased its earnings and upped its dividend. In fact, the company has increased its dividend every single year for 46 years running–a period in which there have been several recessions and market downturns.
Algonquin Power & Utilities
Algonquin Power & Utilities Corp (TSX:AQN)(NYSE:AQN) is another Canadian utility stock. While it’s much smaller than Fortis, it’s experienced far stronger growth over the years. According to The Globe and Mail, its five-year CAGR revenue growth stands at 24.5%.
That’s a phenomenal growth rate by any standard, so it should come as no surprise that AQN’s stock has soared, rising 118% in five years. Like all utilities, AQN benefits from high barriers to entry and an indispensable, recession-resistant service.
Unlike other utilities, it’s investing heavily in green energy, which could be a major benefit to it as climate change regulations impose challenges on more traditional utilities.
Dollarama (TSX:DOL) is one of the few TSX stocks that rose last week, with its Friday closing price 3.48% higher than its Monday closing price. That’s a respectable one-week return, and there may have been a good reason for it.
While Dollarama shares have been tanking in recent years, they could rise in an economic downturn.
If the current coronavirus-driven panic spills over into a full blown recession, people will look for ways to start cutting down on their budgets.
One of the best ways to do that is to shop at dollar stores. Dollarama has a massive presence across Canada, with some of the cheapest prices in the country for items like soda and pre-packaged foods. This could prove an asset if consumers start looking for cheaper alternatives to items they’re already buying.
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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 Andrew Button has no position in any of the stocks mentioned.