Market Crash: 2 TSX Stocks to Buy on the Dip

Whether or not the next selloff is a major market crash or a small correction, these two TSX stocks are at the top of my buy list.

| More on:
stock analysis

Image source: Getty Images

2020 has been a crazy year, and although we are finally getting positive news to end the year, there are still many lingering economic issues, prompting many people to prepare for another potential market crash. You can never know for sure if TSX stocks are about to crash. However, at certain times, the risk of volatility is inherently higher.

In today’s environment, there is a tonne of economic uncertainty, at the same time that many stocks are trading at optimistic valuations. It’s generally only businesses the market deems to still have a high level of risk that are relatively cheap. So it seems like something’s eventually got to give as many analysts and economists are predicting a rocky short-term.

One thing is for sure if we do see a market crash, whether it’s a small 10% correction or a significant 40% bear market, these two TSX stocks are at the top of my buy list.

The top stock to pick up in a market crash

Consumer staples aren’t usually known to be the best long-term growth stocks on the TSX. Sure, they can offer great stability for a portfolio, and oftentimes they will pay a significant dividend, but these won’t be the top performers in your portfolio.

However, one consumer staple that defies all of that is Alimentation Couche-Tard Inc (TSX:ATD.B). Alimentation Couche-Tard is a rapidly growing convenience store and gas station operator.

These businesses are highly defensive during regular recessions. However, Couche-Tard hasn’t run the company to be a steady blue-chip paying out a significant portion of its earnings.

Instead, the company has kept most of its earnings, paying out a small 0.8% dividend and reinvesting the rest in growth. That strategy has paid off tremendously, with Alimentation Couche Tard earning its investors a total return of 997% over the last 10 years.

Couche-Tard is not slowing down, though. Despite the fact that it had planned to start growing more organically in 2020, the pandemic has created several high-potential investment opportunities and Couche-Tard has already pulled the trigger finding new acquisitions to help expand its business.

The sky is the limit for Alimentation Couche-Tard. That’s why it’ll be one of the first stocks I buy in a market crash. It’s put up consistently impressive performance until now and has a tonne of potential looking forward.

A top TSX tech stock to buy in a market crash

The other top TSX stock I’m waiting to buy in a market crash — or at least a significant pullback — is Shopify Inc (TSX:SHOP)(NYSE:SHOP).

Shopify is the premier tech stock on the TSX. Not only is it now one of the most valuable stocks in Canada, but the company is also at the forefront of the rapidly growing e-commerce industry. And with the tailwind e-commerce has seen from the pandemic, the pace of Shopify’s growth is increasing dramatically.

In addition to being a great business that’s growing the number of merchants using its services, the company’s business model is also extremely attractive. By charging a subscription service to use its platform, it ensures that the majority of its sales will be recurring, especially since it can help the users to expand their operations dramatically.

This combination of Shopify’s incredible platform and the significant momentum in e-commerce is creating a unique opportunity that Shopify’s capitalizing on.

The longer merchants therefore have no choice but to operate online, and the more value they can get out of its platform, the more momentum Shopify’s operations will have as we exit the pandemic.

That’s why Shopify will be one of the top TSX stocks to buy in a market crash. Many investors think that when the pandemic is over and the economy recovers, e-commerce will lose some of its popularity.

I view it another way. I think e-commerce will only continue to become more popular with industry costs coming down. So when the economy does recover and economic activity picks up again, that’s when I think you’ll see the real growth from Shopify.

Bottom line

It’s important investors are ready for a market crash at all times. Selloffs can happen out of nowhere, so you’ll want to be ready to buy the best TSX stocks as cheap as possible.

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 Daniel Da Costa has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify and Shopify. The Motley Fool recommends ALIMENTATION COUCHE-TARD INC.

More on Investing

Shopping for consumer goods

Why Shopify Stock Fell 4% in September

Shopify (TSX:SHOP)(NYSE:SHOP) stock is doing its best to keep growing amid rising macro headwinds.

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.

3 TSX Stocks I’d Buy This Week

Are you struggling to find stocks to add to your portfolio this week? Here are my three top picks!

Read more »

Target. Stand out from the crowd
Dividend Stocks

3 Oversold Stocks to Buy for Passive Income

These three oversold stocks aren't just great right now for high passive income, but provide exposure to high-growth industries.

Read more »


3 Stocks to Hold in Your TFSA for Easy Tax-Free Income

Telco stocks like BCE Inc (TSX:BCE) offer high dividend income -- especially when held in a TFSA!

Read more »

Hand arranging wood block stacking as step stair with arrow up.

Why Shawcor (TSX:SCL) Stock Jumped 9% in September

Shawcor Ltd. (TSX:SCL) stock has rallied off big gains after announcing that big changes may be ahead over the next…

Read more »

Mature financial advisor showing report to young couple for their investment
Bank Stocks

Retire Young: How to Turn a TFSA or RRSP Into $1 Million

Here’s how you can turn your TSFA or RRSP into $1 million or more to plan your early retirement.

Read more »

A person holds a small glass jar of marijuana.
Cannabis Stocks

Cannabis Stocks Jump: What Investors Need to Know

Cannabis stocks have started to recover in recent weeks, showing there might be signs that now is the time to…

Read more »

money cash dividends
Dividend Stocks

TFSA Passive Income: Invest $30,000 to Earn $500,000 + $7,800 in Tax-Free Dividends

Make the power of compounding work for you and turn a $30,000 investment into $500,000 in the next 20 years.

Read more »