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.