Last week was one of the worst for the markets in recent memory, with the Dow, S&P 500, and TSX all declining massively before recovering Monday. The Dow fell over 10%, officially entering correction territory, while the TSX just narrowly missed the mark. As coronavirus worries weighed on corporate earnings estimates, investors pulled their money out of the markets, leading to the biggest one-week point drop in the Dow’s history. Whether the selloff was justified or not is up for debate — quarterly reports for the current period should shed some light when they come out. Regardless, though, some stocks are still great buys. The following are three such Canadian stocks that are worth considering.
Fortis is Canada’s largest publicly traded utility company, with 3.3 million customers and $52 billion in assets. Its stock faces some risks, including an extremely high debt level, but is a solid defensive pick for the current market. There are several reasons for this. First, the company’s business doesn’t depend heavily on trade, so it shouldn’t be heavily impacted by coronavirus-related supply shortages or travel restrictions. Second, as a utility, it’s recession-resistant, which could come in handy if the coronavirus panic spills over into a full-fledged economic downturn. Third, the stock pays a dividend, which can provide investors with reliable income, even if the stock declines in a future selloff.
Northwest Healthcare REIT
Northwest Healthcare Real Estate Investment Trust is a real estate trust that invests in healthcare properties, including health clinics and healthcare administrative buildings. The company enjoys high occupancy rates: 95.7% in its Canadian portfolio and 98% in its international portfolio. The REIT’s tenants are healthcare organizations, which are extremely dependable and tend to stick around for a long time. The company could benefit in the current market, if the global health scare leads to increased demand for health services, leading to expanded health clinic office space.
Dollarama (TSX:DOL) is Canada’s largest dollar store chain. It operates a huge network of 1,095 stores from coast to coast. Dollarama hasn’t been the strongest stock in recent years, but it could benefit if the market selloff spills over into a broader recession. In recessions, as job loss take their toll, consumers start looking for ways to cut down on spending. One of the easiest ways to cut down on your budget is by shopping at dollar stores.
Dollar stores offer many of the same items you’ll find at grocery stores, at lower prices. For this reason, you’ll see consumers shopping at dollar stores more often during economic downturns. This is one of the reason that Dollar Tree stock rose over 100% during the Great Recession. Dollarama is well stocked with packaged foods, beverages, and even kitchen supplies at some of the lowest prices in the country. If a recession hits, expect its stock to rise.
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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. The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS.