When it comes to companies in certain sectors, there are a few that stand out as usually doing poorly in a downturn. What especially stands out is any type of company related to consumption. Since investors are seeking to save their cash in the face of inflation and interest rates, they simply cannot spend as much.
Yet in the case of these three top stocks, there is an exception, as there is with every rule. So today let’s look at three hidden gems among the top stocks out there, and whether they should be considered a buy on the TSX today.
Richelieu Hardware
Richelieu Hardware (TSX: RCH) is the first of the top stocks you may want to consider. The Canadian-based company is involved in the manufacturing and distribution of specialty hardware, along with products associated with hardware. Yet while this should perhaps be a company not doing well at a time when the economy is down, Richelieu stock has become one of the top stocks to consider.
This could partly be because of its partnership with manufacturers, builders, and other contractors. Furthermore, Canada continues to be in dire need of new homes, so there is government funding on offer as well. This may be some of the reason Richelieu stock has done so well.
Even so, shares are down 3% in the last year, though up 4% year to date. It has beat out earnings estimate after estimate, yet still remains in value territory at 13.8 times earnings. Finally, there is also a 1.59% dividend yield to consider.
North West Company
Another of the top stocks making waves is The North West Company (TSX: NWC). North West stock is another one of those retail companies that doesn’t only do well during downturns. However, the company focuses on establishing retail businesses in underserved locations, whether it’s urban neighbourhoods, or rural areas in northern Canada.
Because of this, it may provide the only option for some consumers to purchase their essential products. As with Richelieu stock, this has led to several quarters of estimate-beating earnings. And like Richelieu stock, it remains in value territory.
North West stock currently trades at 15.6 times earnings, with a dividend yield at 3.88%. Shares are up 4% in the last year, and 9% year to date. So it’s another of the top stocks that could be a hidden gem in the retail field.
Badger Infrastructure
Finally, while infrastructure can certainly be an essential service, needed even during a bad economy, rising prices do not make building easy. So again, it’s quite interesting that Badger Infrastructure Solutions (TSX: BDGI) is doing well in this economic environment.
Yet in this case, Badger stock focuses much of its attention on one product, its Hydrovac system. This system allows for “non-destructive” excavating services, providing safe excavation around both critical infrastructure and congested areas.
The difference here is that earnings haven’t done as well quarter after quarter, though shares are doing well. Shares are now down 2% in the last year, though still up 11% year to date. And there is another dividend to consider, at 2.21%.
