The Weekly Special: Seafood and Wine Stocks

These two under-the-radar stocks should be able to weather a recession well and already trade undervalued, making them ideal investments.

| More on:
Top view of people having party, gathering, celebrating together

Image source: Getty Images

As we begin 2023, and earnings season starts to kick off, many continue to anticipate a recession on the horizon. So, it’s crucial in this environment that investors are selective when it comes to the stocks they are buying.

Of course, we want to take advantage of the opportunities that selloffs create, but we also need to be aware that a recession can have significant impacts on businesses and their valuations.

That’s why some of the best stocks to buy now are ones that aren’t just cheap. You also want to look for companies in defensive industries that will be only minimally impacted by a recession.

Consumer staples are an excellent example. These stocks will often see fewer impacts on their revenue during periods of slowing economic growth.

So, if you’re looking to find excellent investments to make in this uncertain environment, here are two under-the-radar consumer staple stocks that offer defence but also already trade ultra-cheap.

A top Canadian seafood stock

One of the top under-the-radar stocks you can buy in this economic environment is High Liner Foods (TSX:HLF).

High Liner is one of the largest seafood producers and distributors in North America, specializing in frozen seafood products such as fish fillets, crab, and shrimp. The company sells both to grocery stores and restaurants. Therefore, High Liner could certainly see some impacts on its revenue, especially at the restaurant level.

For the most part, though, High Liner is a relatively defensive stock, and lately, it’s been increasing its sales, which is evident when looking at its financials.

For six straight quarters now, High Liner has grown its sales year over year by at least 10%. Furthermore, the company has been profitable for 11 straight quarters now, including through the entire pandemic.

So, if you’re looking for a high-quality defensive stock to buy for your portfolio in this environment, High Liner has a tonne of potential, and it offers a dividend yield of roughly 3.5%.

A top winemaker with highly resilient revenue

In addition to High Liner, another stock to buy with highly defensive operations is Andrew Peller (TSX:ADW.A).

Andrew Peller is predominantly a wine maker but also sells a variety of alcoholic products through wholesale channels and through its own retail stores. The stock makes for an interesting investment because it’s already ultra-cheap, and traditionally, alcohol is a highly defensive industry.

Alcohol is generally a relatively stable and inelastic part of people’s budgets. So, in times of economic hardship, people are less likely to significantly reduce their alcohol consumption. This makes alcohol much more defensive compared to more cyclical industries that are vulnerable to economic downturns.

Furthermore, Andrew Peller sells a range of products with several low-cost options for consumers. Throughout the pandemic, for example, its sales actually increased slightly, despite the uncertain economic environment.

And although those sales slightly dropped off after the lockdowns ended, it’s once again growing its revenue in recent quarters, as it looks to manage its rising costs while inflation continues to surge.

With the stock now trading below $5 a share, it’s down more than 50% from where it was at the start of the pandemic. And if it can soon get its cost under control and start to improve its operating margin, Andrew Peller has the potential to be extremely profitable.

So, if you’re looking for an ultra-cheap consumer staple stock to buy in this economic environment, Andrew Peller certainly has some risks, but it also has a tonne of potential to improve its share price.

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 Daniel Da Costa has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Investing

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Monday, June 3

After sliding by 2% in the previous month, the TSX Composite Index surged by 2.6% in May 2024.

Read more »

Target. Stand out from the crowd
Stocks for Beginners

2 No-Brainer Stocks to Buy With $7,000

Got some cash to fill up your TFSA? Here are two stocks that look like good buys on the recent…

Read more »

Path to retirement

RRSP Must-Haves: 2 Canadian Stocks to Secure Your Retirement

Future retirees can use the RRSP to save for retirement and be financially secure with the help of a Dividend…

Read more »

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies

2 Utility Stocks That Could Help Energize the AI Boom

Canadian Utilities (TSX:CU) and another great utility stock could indirectly benefit from the rise of AI.

Read more »

top TSX stocks to buy
Stocks for Beginners

3 Stocks That Can Help You to Get Richer in 2024

These three stocks have already proven their worth this year, but are set to continue climbing in 2024 and even…

Read more »

Woman has an idea
Dividend Stocks

3 No-Brainer Best Dividend Stocks in Canada to Buy With $500 Right Now

Are you craving more cash flow? $500 in one of these best dividend stocks in Canada might deliver a slice…

Read more »

Canadian energy stocks are rising with oil prices
Dividend Stocks

5 Stocks Whose Dividends Just Keep Growing

Stocks like Enbridge and Fortis are growing their dividends for decades, and returning higher cash to their shareholders.

Read more »

Man considering whether to sell or buy
Tech Stocks

BlackBerry Stock Is Down 20%: Buy the Dip or Call It a Pass?

BlackBerry stock has seen a series of 20% monthly dips since December 2023. Should you buy the dip or call…

Read more »