The ongoing macroeconomic uncertainties are worrying stock investors across the globe. This is one of the key reasons why the participation of new investors in the stock market has reduced in the last year after surging significantly during the COVID-19 pandemic phase. New investors, however, need to understand that investing is not a short-term sprint but a long-term marathon. That’s why you’ll often find the world’s most successful investors, including Warren Buffett, stressing the importance of investing in stocks for the long term.
As far as ongoing market uncertainties are concerned, the recent stock market correction could be a great opportunity for new investors to enter the market, as several fundamentally strong stocks look really cheap at the moment. But in this article, I’ll focus on one of the safest Canadian stocks beginners can buy right now and hold forever to expect to receive healthy returns on their investments each year.
Dollarama stock
It’s very likely that you already have heard of Dollarama (TSX:DOL) — the popular Canadian discount retail store operator based in Mont Royal. It currently has a market cap of about $23 billion, as this safe stock trades at $80.04 per share with 25.5% year-to-date gains, outperforming the broader market by a huge margin. By comparison, the TSX Composite benchmark has slipped by more than 9% so far in 2022.
This Canadian value retailer currently owns a big chain of retail stores at 1,431 locations across Canada. Apart from metropolitan areas, Dollarama also has a strong presence in mid-sized and small cities in the country. Apart from its consistently growing business in the home market, the company also has a 50.1% interest in the Latin American value retailer Dollarcity.
What makes it one of the safest stocks for beginners in Canada?
As you might already know, the ongoing stock market volatility is primarily fueled by concerns about high inflation and rising interest rates, which might temporarily hurt economic growth.
When inflation continues to steal money out of consumers’ pockets for a long time, most people tend to cut their discretionary expenses. However, the sales of Dollarama’s affordable essential products and consumable items largely remain unaffected even during economic downturns. This is one of the key reasons why this safe stock continues to outperform the main Canadian market index in the ongoing year, despite fears of a near-term recession.
But why buy it right now?
But if you’re wondering why you should buy this safe stock when it has already gone up sharply in 2022, let me tell you that Dollarama stock has yielded solid double-digit positive returns each year since 2010, except in one (2018). Overall, the stock has yielded outstanding 692% positive returns in the last 10 years.
Given that, it might not be logical to avoid buying this stock now with the thought that it already has risen so much. In fact, in uncertain economic times like these, the demand for safe stocks like Dollarama tends to surge, which could help it continue soaring. That’s why beginners can kickstart their investing journey by investing in this safe stock now to hold for the long term.
