Weak markets are a test of both investments and investors. For investments, they are a test of resilience and stability. If a stock cannot survive a weak market or cannot recover (in due time) from a market slump, it can’t prove its mettle as a long-term holding.
Similarly, investors need to make smart, calculated decisions during weak markets or risk incurring losses by joining sell-out frenzies that are common with weak markets.
Not all factors that lead to a weak market or a market crash are the same, and some are more unpredictable than others. Coronavirus is a great example of a relatively unique market-instability trigger, and stocks that survived are worth considering for their stamina and resilience.
An engineering company
WSP Global (TSX:WSP) offers a wide variety of engineering, consultancy, and support services to multiple sectors. The company has taken on a wide range of complex projects around the globe, thanks to the expertise of a comprehensive range of professionals connected with the company.
This flexibility, geographic diversity of services and solutions, and a service-oriented business model are some of the factors behind the resilience of the company in a weak market.
As a stock, WSP Global might not seem very attractive right now due to its overvaluation. However, the long-term growth potential the stock offers significantly outweighs the risk of buying an overvalued security. The stock has risen over 490% in less than a decade.
If it continues growing at the same pace, it may significantly boost your invested capital and contribute to the overall growth of your portfolio.
A food and pharmacy retailer
Food and medicine are two businesses that are somewhat sheltered from weak markets since they are among the necessary expenses most households can’t divest from, regardless of the economic condition. This makes Metro (TSX:MRU) a naturally resilient and healthy pick, and it proved this notion during COVID. It barely slumped during the 2020 crash and recovered within months.
Its stability and stamina are not the only reasons to consider this stock. Its return potential is also quite attractive, though the growth far outshines its dividends, even as an Aristocrat. It returned over 250% to its investors in the last decade through dividends and capital appreciation, though it later made up the bulk of these returns.
A bank
Royal Bank of Canada (TSX:RY) is not just the largest bank in Canada; it’s also among the most stable financial institutions in the country. It’s large enough to influence many of the movements in the Canadian banking sector rather than being influenced by such movements. The bank stock also managed a relatively quick recovery after the 2020 crash (before entering 2021).
The investment is worth considering for both its growth potential and dividends. Based on the numbers from the last 10 years, it’s the second-best growth stock in the banking sector and returned almost 100% over that period. The dividends almost doubled these returns. The stock is still offering a juicy 4.1% yield.
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Foolish takeaway
The three stocks have proven their mettle in COVID and have shown that they might be able to survive weak markets better than the rest. This resilience is just one of the attractions of these stocks. They also offer decent return potential.
