2 Top TSX Consumer Stocks to Buy in October

These consumer stocks are a must-have in your portfolio for stability, income, and consistent growth.

| More on:
Shopping for consumer goods

Image source: Getty Images

The record-high inflation, rising interest rates, and supply-chain issues have taken a toll on most sectors. While shares of consumer companies aren’t immune to these headwinds, they have experienced relatively stable performance in 2022, thanks to their defensive business model. 

Thus, adding these low-volatility stocks to your portfolio would bring stability and reduce the overall risk amid ongoing macro headwinds and uncertainty. Against this backdrop, here are two top TSX consumer stocks that have fared better than the broader markets in 2022 and will likely beat the benchmark index in the foreseeable future. 

Dollarama 

Dollarama (TSX:DOL) has performed exceptionally well in 2022 and outperformed the benchmark index by a wide margin. For instance, Dollarama stock has gained over 29% this year compared to an approximate decline of 11% in the S&P/TSX Composite Index.

The key to Dollarama’s success is its broad assortment of consumable products, compelling value, and store growth. Its large store base spread across all the 10 provinces provides it a competitive advantage over its peers.

Given its value offerings and solid store base, Dollarama’s revenue and earnings have grown at a CAGR (compound annual growth rate) of 11% and 17%, respectively, since 2011. Further, in the first quarter (Q1) of fiscal year 2023, Dollarama reported sales growth of 12.4%. Meanwhile, its earnings per share (EPS) jumped by 32.4%. Also, Dollarama’s EBIT (earnings before interest and taxes) margins remain high and steady, despite the macro disruptions.   

Thanks to the steady earnings growth, Dollarama has consistently raised its dividend for over a decade and expects to increase it in the coming years. 

Looking ahead, Dollarama is well positioned to deliver strong financials on the back of an increase in its store base. Dollarama plans to expand its store base to 2,000 by 2031. Further, its expanded offerings and value pricing will help it to win customers and drive its stock price higher. 

Alimentation Couche-Tard 

Shares of Alimentation Couche-Tard (TSX:ATD) are a must-have in your portfolio for stability, income, and consistent growth. Its stock is relatively less volatile irrespective of the wild market swings due to the recession-resilient business. Its solid store presence in Canada and growing foothold in the U.S. continue to support its sales and earnings. 

Besides its significant scale, the ability to acquire and integrate fast-growing businesses accelerates its growth and supports its stock price. Alimentation Couche-Tard stock is up about 8% in 2022 and outperformed the benchmark index. 

The company has been growing its revenue and EPS at a breakneck pace. Its top line has a CAGR of 11% since 2012. Meanwhile, its adjusted EPS grew at a CAGR of 20% during the same period. Thanks to its solid earnings base, Couche-Tard’s dividend has a CAGR of 24.7% in the last 10 years. 

Looking ahead, Couche-Tard’s value offerings and cost efficiencies will support its organic sales and margins. Further, strength in the U.S. business, geographic expansion, and accretive acquisitions will support its growth. Couche-Tard’s low-cost debt and solid balance sheet show that it has substantial investment capacity, which will drive long-term growth. 

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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alimentation Couche-Tard Inc. The Motley Fool has a disclosure policy.

More on Investing

top TSX stocks to buy
Dividend Stocks

Passive Income: How Much Should You Invest to Earn $500 Every Month?

These two Hamilton ETFs could be the perfect way to achieve modest passive-income potential.

Read more »

Growing plant shoots on coins
Dividend Stocks

3 Growth Stocks That Could More Than Double Their Revenue by 2025

Three growth stocks outside the tech sector are strong buys for their massive revenue growth potential by 2025.

Read more »

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

Married Canadians: Know This Before Filing Your Taxes

Married Canadians, make sure you consider all your options before filing your tax returns! You could be missing out on…

Read more »

Man considering whether to sell or buy
Bank Stocks

Is RBC Stock a Buy, Sell, or Hold?

Shares of Royal Bank of Canada have delivered game-changing returns to shareholders in the last two decades. Is RBC stock…

Read more »

Dollar symbol and Canadian flag on keyboard
Investing

3 of the Best Canadian Stocks I Plan to Hold Forever

These may not be the cheapest stocks, but they certainly have delivered for patient long-term investors. Here's why they are…

Read more »

Payday ringed on a calendar
Dividend Stocks

These 2 TSX Dividend Machines Pay You Monthly

Here are two of the best monthly dividend stocks you can buy in Canada right now and hold for the…

Read more »

Paper airplanes flying on blue sky with form of growing graph
Investing

This Could Be the Cheapest Stock in Canada

Air Canada may be among the cheapest Canadian stocks for investors to consider right now, but it's cheap for a…

Read more »

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

The Best Stocks to Invest $4,000 in Right Now

If you are waiting for a stock market pullback and got some cash to deploy, here are four stocks to…

Read more »