2 TSX Stocks That Can Deliver Massive Gains in a Recession

Restaurant Brands International (TSX:QSR)(NYSE:QSR) stock and another recession-resilient firm that can win big in 2023.

| More on:
Chalk outline of two arrows pointing in opposite directions

Image source: Getty Images.

Instead of trying to avoid market damage that tends to accompany recessions, you should seek to better prepare for tough times. Indeed, it’s hard to escape the recession downside now that the S&P 500 is already off by around 25% from its peak. If anything, the next major move that follows could be prosperous for those hanging on. It won’t be easy to brave the market sell-off, but I do think fortune favours the bull, especially in this unrelenting bear market.

With that in mind, let’s check out two intriguing TSX stocks that may help stabilize your portfolio in a recession. Now, every stock is “risky” in the face of rising rates. That said, the longer-term risk/reward profile seems too good to pass up. No pundit on TV will tell you such. The last wave of bullish pundits seems to have been wiped out by the market’s September slump.

In any case, here are two stocks I’d not be afraid to buy going into the fourth and final quarter of the year.


Dollarama (TSX:DOL) is a discount retailer that has continued to move higher, even as the TSX and S&P 500 sunk. The stock’s less than 4% away from making a new all-time high north of $80 per share. And I think it can hit new highs, even as the rest of this market crumbles like a paper bag.

High inflation and tough economic conditions could lead to even more business for dollar store giants. Cost certainty is hard to find these days. Only a few retailers can offer it consistently. Dollarama is one of them and could be in a spot to shoot for $100 per share, as the discount retail kingpin takes market share away from firms that simply cannot provide the savings Dollarama can.

At 31.6 times trailing price-to-earnings (P/E), you’ll pay up for the defensive exposure. The $22.7 billion discount retailer isn’t just a recession-worthy play; it’s growing fast with an international business that could pay dividends for years to come.

Simply put, Dollarama is well-placed to chug higher as the 2023 recession arrives. Post-recession, Dollarama can continue to march even higher, as it looks to reinvest its plentiful earnings stream.

Restaurant Brands International

Restaurant Brands International (TSX:QSR)(NYSE:QSR) is another fortunate firm that’s about to enter a Goldilocks environment. Burger King is on the cusp of a huge reinvention. The long-time burger chain, known for its solid value menu, will be serving a growing number of customers seeking to save money.

Indeed, fast food restaurants are in a great spot as industry dynamics shift in their favour. It’s not just industry tailwinds in a recession that could give QSR a jolt. The company is investing money in the right places. In prior pieces, I praised management for cutting back on cost cuts (pardon the pun!) and investing money accordingly to sustain robust growth.

Restaurant Brands is more than capable of growing in any type of environment. If anything, a recession may work in its favour! On Thursday, shares sunk 2% in a move that I thought made no sense. I think it’s a gift courtesy of a stressed-out Mr. Market that’s getting way too bearish for its own good.

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 Joey Frenette has positions in Restaurant Brands International Inc. The Motley Fool recommends Restaurant Brands International Inc. The Motley Fool has a disclosure policy.

More on Top TSX Stocks

top tsx growth stocks to buy
Top TSX Stocks

Top 10 Growth Stocks in Canada for December 2022

We asked our freelance writer investors to share their best growth stock ideas for the rest of 2022. Here's what…

Read more »

Man considering whether to sell or buy
Top TSX Stocks

2 Fallen TSX Market Darlings That are Beyond Oversold

Algonquin Power & Utilities (TSX:AQN) and Shopify (TSX:SHOP) are under serious pressure right now.

Read more »

Electric car being charged
Top TSX Stocks

Is Now the Right Time to Buy Magna Stock?

Magna International (TSX:MG) stock retains potential upside after a near 20% rally over the past month. There's one key risk…

Read more »

a person watches a downward arrow crash through the floor
Top TSX Stocks

Don’t Wait for the Market Bottom: These 2 Top TSX Stocks Are on Sale Today

Although waiting for the market bottom can be appealing, these two TSX stocks are already on sale and offer investors…

Read more »

Illustration of bull and bear
Top TSX Stocks

These TSX Stocks Have Plenty of Room to Run

These 3 TSX stocks offer handsome growth prospects amid challenging macro conditions

Read more »

top canadian stocks on tsx to buy november 2022
Top TSX Stocks

Top TSX Stocks to Buy in November 2022

Every month, we ask our freelance writer investors to share their best stock ideas with you. Here’s what they said…

Read more »

A plant grows from coins.
Top TSX Stocks

3 Stocks I’m Buying till I’m Blue in the Face

These three stocks are excellent long-term investments and ultra-cheap, making them some of the top stocks I'm buying in this…

Read more »

Man holding magnifying glass over a document
Top TSX Stocks

Why Is Everyone Talking About Nutrien Stock?

There’s more to the NTR stock (TSX:NTR) decline than an earnings miss and earnings guidance revision. Watch goodwill!

Read more »