If there’s a single word that describes how the market has fared in 2023 so far, it would be volatile. Soaring interest rates and still-high inflation have stoked many to continue talking about a recession later this year or well into the next.
Investing in stocks to offset that volatility is always a great tactic for long-term growth. Incredibly, some investors continue to avoid some of the best options in this regard, which happens to be retail stocks.
Here’s a look at two retailers to consider right now, even despite everyone still talking about a recession.
Start with an established retailer
Canadian Tire Corporation (TSX:CTC.A) is one of, if not the best-known retailer in Canada. Apart from its namesake store, the company owns a growing number of well-known retail banners, making it a well-diversified pick.
That’s not all. Canadian Tire has acquired a growing number of product brands, which the retailer then sells exclusively through its stores and online. This has helped Canadian Tire to establish an online defensive moat to counter larger online retailers.
If that’s not enough, Canadian Tire also boasts an incredibly popular rewards program, which has fueled the company’s online growth further. This embracing of technology by Canadian Tire extends into its stores as well.
By way of example, shoppers can run on a treadmill to help identify the best-fitting shoe. They can also try out new tires in different weather conditions using a driving simulator before buying. Both are great examples of marrying technology within a brick-and-mortar store that is unavailable elsewhere.
Finally, Canadian Tire is also one of the few retailers to pay out a handsome quarterly dividend. As of the time of writing that yield works out to a juicy 4.09%, making it one of the better-paying yields on the market.
Add a growth-focused retailer with a big upside
When was the last time you filled up the tank of your car and realized the gas station might be a viable investment option? That’s precisely the case with Alimentation Couche-Tard (TSX:ATD), which is one of the largest gas station and convenience store operators on the planet.
Couche-Tard has taken a very aggressive stance on growth, which is a key reason the company has amassed a network of over 14,000 stores in 26 countries. Couche-Tard’s growth potential isn’t only through acquisitions; the company is also evolving its business.
By way of example, last year the company announced a 200-site EV network for the U.S. That network, which Couche-Tard will refine over time to the needs of the U.S. market, will be ready within the next year. And so far in 2023, the company has made a pair of acquisitions, which include over 100 U.S.-based MAPCO Express stores, and 2,193 retail sites of European-based TotalEnergies.
The defensive appeal of Couche-Tard, coupled with the company’s aggressive take on expansion is a key reason why the stock is up considerably over the past year. In fact, Couche-Tard is up over 12% year to date.
So then, why invest in Couche-Tard right now? Couche-Tard offers long-term growth that is wrapped in a defensive shell. Notwithstanding more investors talking about a recession, Couche-Tard remains focused on long-term growth.
In other words, despite the stock being up double-digits in 2023, that growth appears set to continue. That factor alone makes it a stellar buy for any long-term portfolio.
Talking about a recession doesn’t matter if you own the right stocks
Both Canadian Tire and Couche-Tard are defensive stocks that are great holdings in times of volatility. They also both boast strong long-term growth potential and, in the case of Canadian Tire, a juicy quarterly yield.
In my opinion, one or both of these stocks warrant a place in any well-diversified portfolio.
