2 TSX Stocks to Buy During a Market Correction

These two TSX stocks could be ideal additions to your investment portfolio if you are worried about a market downturn.

| More on:
Volatile market, stock volatility

Image source: Getty Images

February and March 2020 saw a major market crash, as the danger of COVID-19 became more apparent worldwide. After registering staggering declines in a matter of weeks, global stock markets managed to recover. The S&P/TSX Composite Index went on to recover its losses in the months after the March 2020 bottom and consistently soared to new heights in 2021.

Just when the prospect of moving into a post-pandemic era seemed closer, the Omicron variant of COVID-19 came along. The new variant seems scary, and many people fear that lockdowns and further economic disruptions could derail the global recovery as we come closer to 2022.

At writing, the Canadian benchmark index is down by over 4% from its all-time high in November 2021, up after a sharp correction in a few days. While it does not necessarily mean that we might see a full-blown market crash soon, planning for a market correction might be a wise move.

Today, I will discuss two TSX stocks that you could consider adding to your portfolio to prepare for a market pullback.

National Bank of Canada

National Bank of Canada (TSX:NA) is one of the several stocks that saw a sudden downturn due to the selloff caused by investor panic. However, National Bank of Canada was one of the best-performing financial institutions in the country through the worst of the pandemic. The $33.05 billion market capitalization financial institution is the sixth of the Big Six Canadian banks. It is well positioned to deal with any near-term challenges posed by the new variant.

The bank stock is trading for $97.85 per share at writing, and it has plenty of room to deliver growth to its shareholders. The bank is likely to expand its operations in other Canadian provinces and gain more traction in the domestic banking sector.

Alimentation Couche-Tard

Alimentation Couche-Tard (TSX:ATD.B) is a $52.49 billion convenience store giant with over 15,000 locations throughout Canada, the U.S., Mexico, Ireland, Norway, Sweden, Denmark, Estonia, Latvia, Poland, Japan, Russia, China, and Indonesia. The company’s revenues might take a hit if the Omicron variant causes disruptions in fuel sales by depressing travel demand due to more lockdowns.

However, its online sales through food delivery apps have been a strong growth driver for its revenues that could mitigate the losses.

Alimentation Couche-Tard also boasts significant liquidity, and it could leverage a downturn to acquire its competitors for a bargain if they fall under considerable pressure. At writing, Alimentation Couche-Tard stock is trading for $48.89 per share, and it boasts a meager 0.90% dividend yield.

Foolish takeaway

The rapid decline and recovery within a few days indicate that there may be more volatility headed our way. Whether that means that we could witness a significant downside market correction remains to be seen. However, it might be a smart move to reposition your portfolio and reduce your exposure to sectors that entail more capital risk during a downturn.

Investing in assets that are well positioned to face a downturn and recover quickly might be a viable way for you to proceed. National Bank of Canada stock and Alimentation Couche-Tard stock could be good assets to consider adding to your self-directed portfolio for this purpose.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends ALIMENTATION COUCHE-TARD INC.

More on Dividend Stocks

calculate and analyze stock
Dividend Stocks

2 Top TSX Stocks to Put on Your TFSA Buy List

TFSA investors are searching for undervalued TSX stocks to buy that have the potential to deliver big gains in 2022. …

Read more »

Payday ringed on a calendar
Dividend Stocks

Get Unbelievable Monthly Income With High-Yield Dividend Stocks

The only thing better than a dividend stock is a stock that pays dividends every month. For people who live …

Read more »

gas station, convenience store, gas pumps
Dividend Stocks

1 Key Catalyst Investors in Couche-Tard Stock Need to Watch

One of the top value stocks on the TSX, Alimentation Couche-Tard (TSX:ATD) has been a strong performer over the past year. …

Read more »

Value for money
Dividend Stocks

2 Top Value Stocks I’m Looking to Buy Right Now

Value investing is a lot more than just grabbing stocks that look inexpensive. The shares of an organization in permanent …

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

RRSP Investors: 2 Top Canadian Dividend Stocks to Buy for Total Returns

Canadian savers are searching for good TSX stocks to buy inside their self-directed RRSP that pay reliable dividends and can …

Read more »

Cogs turning against each other
Dividend Stocks

2 Dividend Stocks That Could Stabilize Your TFSA During a Market Correction

A common strategy for investing during a market downturn is to allocate a greater proportion of your portfolio towards dividend …

Read more »

Close up shot of senior couple holding hand. Loving couple sitting together and holding hands. Focus on hands.
Dividend Stocks

3 Top Passive-Income Stocks for Canadian Pensioners

Canadian retirees are searching for quality dividend stocks to buy insider their TFSA to generate reliable and growing passive income. …

Read more »

Dividend Stocks

2 Top Dividend Stocks to Buy Today

Dividend investing is one of the best approaches to stock market investing with a long-term view. Allocating a significant portion of …

Read more »