Worried About High Inflation? 1 All-Weather TSX Stock to Buy in 2023

Here’s a safe TSX stock you can buy for the long term to protect your portfolio from inflation worries.

| More on:
analyze data

Image source: Getty Images

Canadian stock market volatility has seen a big spike in the last few years, as multiple macroeconomic and geopolitical concerns continue to keep investors on edge in the post-pandemic era. Consistently high inflation is one of the biggest challenges that countries across the world have been struggling with lately. In such difficult times, picking quality defensive stocks to invest in for the long term has become difficult. But the good news is that the market is always filled with opportunities, whether you’re a defensive investor or focused mainly on growth.

In this article, I’ll talk about a top, all-weather TSX stock with low volatility to buy that you can buy now, despite fears of a recession and hold for years to come.

A top all-weather TSX stock to buy now

Given the ongoing macroeconomic uncertainties and concerns about high inflation, Dollarama (TSX:DOL) could be a trustworthy stock to buy for the long term. This Mont Royal-headquartered value retailer currently has a market cap of $23.5 billion, as its stock trades at $82.42 per share with about 3.8% year-to-date gains.

Interestingly, despite the broader market rollercoaster in recent years, this TSX defensive stock has consistently been delivering healthy double-digit positive growth for the last four years. With this, it has yielded a solid 153% positive returns since the end of 2018. And its recent financial growth trends justify this stock price rally.

In the five years between its fiscal year 2018 and 2023 (ended in January), Dollarama’s total revenue surged by 55% to $5.1 billion. During the same period, its adjusted earnings jumped by 82% to $2.76 per share. Moreover, the Canadian retailer posted a strong 15.9% adjusted net profit margin in its fiscal year 2023, showcasing its ability to maintain strong profitability, even during a high inflationary environment. With this, Dollarama managed to beat analysts’ estimates and meet its fiscal year 2023 guidance.

What makes it a great safe stock to buy now?

Despite facing COVID-19-related challenges in recent years, the demand for Dollarama’s affordable essential items continued to rise, which helped it post strong business growth. You can expect this growth to improve further in the coming years, as the company continues to expand its reach and international footprint. At the end of the January 2023 quarter, it had 1,486 corporate-operated Dollarama stores in Canada. The company plans to expand its store count in Canada to around 2,000 by 2031. Besides its home market, Dollarama also runs 440 Dollarcity stores in four Latin American countries. It targets to expand its Dollarcity store count to around 850 by 2029.

Apart from these business expansion efforts, Dollarama’s key focus on optimizing capital allocation to drive strong shareholder returns and maintaining compelling value propositions for its customers make its business model very reliable, even in difficult economic times. These are some of the key reasons that make it a safe TSX stock to invest in to buy now and hold for the long term.

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.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

More on Stocks for Beginners

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

How to Use a TFSA to Earn $250 per Month in Tax-Free Passive Income

Looking for long-term growth in your TFSA? Here is exactly how to create the perfect passive income portfolio, and where…

Read more »

Technology, internet and networking, security concept
Tech Stocks

Down 45%, Is BlackBerry Stock Fairly Valued?

BlackBerry stock (TSX:BB) looks like it could be a good buy at these share prices, but it still has a…

Read more »

Happy shoppers look at a cellphone.
Stocks for Beginners

Why Is Aritzia Stock Up 22% After Earnings?

Aritzia stock (TSX:ATZ) surged in share price after its last earnings, so is it still a good buy? Or should…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

1 TSX Stock That Could Help Set You Up for Life

Early investors in Intact Financial (TSX:IFC) stock could earn a 17% dividend yield in 2024. Here's how IFC stock could…

Read more »

Target. Stand out from the crowd
Stocks for Beginners

5 Stocks You Can Confidently Invest $500 in Right Now

Whether it's stocks making a comeback or proven investments over decades, these five belong in your portfolio.

Read more »

Stocks for Beginners

I’d Aim for $1 Million Buying Just These 3 TSX Stocks

These three TSX stocks have a long history of making millionaires, but don't count them out. Long-term investors have more…

Read more »

Dice engraved with the words buy and sell
Stocks for Beginners

TD Bank Stock: Buy, Sell, or Hold?

TD bank (TSX:TD) continues to face issues regarding its anti-money laundering issues, but has made a great start.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Stocks for Beginners

5 Canadian Stocks to Buy and Hold Forever in Your TFSA

Are you looking for some Canadian stocks for a long-term investment? These evergreen stocks can help you generate wealth and…

Read more »