There’s no denying the fact that market volatility has created a weird mix of opportunity and fear in 2022. Market volatility isn’t something that investors should shy away from. In fact, it exposes some stellar opportunities for long-term growth. Here are some TSX stocks that are great examples.
For the growth-focused investor, this is the stock to own right now
When volatility increases, consumer spending habits change. People will seek out more frugal options to buy goods. And it’s that search for less-expensive options that leads shoppers straight to Dollarama (TSX:DOL).
Dollarama is the largest dollar store chain in Canada with a presence in every province. The retailer also boasts a growing presence in multiple Latin American markets through its Dollar City brand.
But what makes a retail stock like Dollarama a solid buy to counter market volatility? There are a few reasons to note.
First and foremost, consumers will seek out lower-priced items during a slowdown, when budgets are tight. This is why dollar stores like Dollarama tend to thrive during recessions and slowdowns.
Additionally, Dollarama’s unique pricing model also plays a part. Dollarama prices the goods it sells along several fixed-price points up to $5. This simplifies the shopping experience, while also projecting a greater sense of value to shoppers. Dollarama also bundles many lower-priced items into a single price, further enhancing that sense of value.
The result is solid growth that is completely contrary to the market. That’s part of the reason why Dollarama has soared over 20% year to date while the market remains in the red.
But why buy now?
Dollarama continues to invest in growth. By way of example, over the past decade, the stock has soared over 680%.
The company has always taken an aggressive stance on growth and shows no signs of slowing. Specifically, Dollarama is investing in further growing its domestic network, while also growing internationally.
In short, Dollarama is a long-term gem handily beating market volatility.
Income-seeking investors can rejoice, too
Dollarama is great for growth-seeking investors, but it can’t offer any significant income-earning potential. Fortunately, there are other investments that can offset market volatility and provide that income.
One such example is Fortis (TSX:FTS).
Fortis is one of the largest utilities on the continent. The company boasts over 3.4 million customers across both its electric and gas segments, with operations located across Canada, the U.S., and the Caribbean.
But that impressive footprint isn’t how Fortis offsets market volatility. For that, let’s talk about Fortis’s business model.
Utilities adhere to long-term contracts that can span decades. Those contracts, in turn, ensure that the utility generates a recurring revenue stream. Keep in mind that stability is unaffected by changes in the overall market. In other words, the sheer necessity of the service that Fortis provides makes it the ultimate defensive investment.
That factor alone makes it a great stock to offset market volatility, but there’s still more — specifically, income.
As an income investment, Fortis really shines. The company offers a juicy quarterly dividend that works out to an impressive yield. As of the time of writing, that yield is 4.36%.
This means that a $40,000 investment in Fortis will earn first-year income of $1,744. And that’s not even the best part. Fortis has provided generous annual bumps to that dividend for 48 consecutive years. The company has plans to continue those increases of 6% throughout the next few years.
This not only makes Fortis a great defensive option to counter volatility but also a superb option to earn a growing, stable, and recurring income stream.
Counter market volatility today and get rich tomorrow
No stock is without risk. Both Fortis and Dollarama are fortunate enough to operate in unique segments of the market, where the services they provide aren’t impacted by volatility.
In my opinion, one or both stocks would do well as part of a larger, well-diversified portfolio.