For over a year, many analysts and economists have been expecting a recession. Plenty of investors have been looking to shore up their portfolios and buy the best stocks that can help protect their capital.
So far, a recession has yet to materialize, but there are many reasons why investors continue to prepare for a weakening economic environment.
Inflation has sent living costs soaring, and even though the inflation rate has been falling, the price of goods continues to rise. In addition, interest rates continue to rise.
That makes debt more expensive to service, leaving Canadians with less cash for consumption, and incentivizes Canadians to save instead of spend.
Therefore, given the significant amount of consumer debt in North America, especially in Canada, and considering that there are many reasons why consumption could slow in the coming months, many investors are worried about a potential recession.
If you think a recession is on the horizon and want to ensure your portfolio is in tip-top shape, here are three of the best stocks to buy right now.
A top Canadian utility stock to buy ahead of a recession
If you’re worried a recession is on the horizon and want to shore up your portfolio, one of the top stocks to buy is Fortis (TSX: FTS), the Dividend Aristocrat with a whopping 49 straight years of dividend increases.
The most important reason why Fortis is a stock to buy now is not just that it’s defensive and ideal for a recession, but because it’s a high-quality stock that you can hold in your portfolio for the long haul.
While shoring up your portfolio can be important, buying stocks solely to ride out a recession is risky and requires you to try to time the market.
You’re far better off finding high-quality stocks that will increase the safety of your portfolio immediately but that you can still hold for the long haul.
And considering Fortis is not just defensive, but it’s constantly expanding its operations and growing its earnings, it’s one of the best Canadian companies to own as a core portfolio stock.
It’s also worth noting that Fortis is trading at a forward price-to-earnings ratio of just 17.5 times, below its five-year average of 19.3 times. Therefore, while it’s undervalued and offers a yield of roughly 4.2%, it’s one of the best stocks to buy if you’re worried about a recession.
An impressive growth stock to buy that can benefit from a recession
Another excellent stock to buy, especially if you believe a recession is on the horizon, is Dollarama (TSX: DOL).
Dollarama is another great investment, just like Fortis. It’s constantly growing its store count and expanding operations, creating significant value for shareholders. So, it’s an excellent stock to buy and hold for the long term.
In addition, because Dollarama is a discount retailer, it can actually benefit from weakening economic environments. This makes it the perfect stock to buy now for the long term, especially if you’re worried there might be a recession in the near term.
In just the last 10 years, Dollarama has earned investors a total return of more than 608%, or a compounded annual growth rate of 21.6%.
A high-quality defensive stock in the health and wellness space
Lastly, Jamieson Wellness (TSX: JWEL) is another high-quality defensive growth stock that can help protect your capital in the current economic environment while offering attractive growth potential over the long haul.
Jamieson is a health and wellness company that manufactures, markets, and distributes a variety of vitamins and minerals. Therefore, it’s a reliable and defensive stock that shouldn’t see a significant impact on business should a recession materialize.
Since going public in 2017, Jamieson has only had one quarter where its sales didn’t increase year over year (they declined just 0.6%). This shows how resilient it can be through different economic environments. It also shows what a consistent growth stock Jamieson is.
Plus, Jamison trades at just 16.5 times its forward earnings, the cheapest it’s been in the last five years and below its five-year average of 24.2 times.
If you’re worried about a recession, Jamieson is certainly one of the best stocks to buy now.
