2 Safe Canadian Stocks to Buy in September 2023

The Canadian stock market rollercoaster doesn’t seem to be ending soon, as macroeconomic uncertainties keep investors on their toes. After regaining investors’ confidence by posting 5.4% gains in the June and July combined, the main TSX index turned negative again in August. While it has seen a minor 0.4% decline in September so far, the possibility of it moving further downward can’t be denied completely amid worries about more interest rate hikes and underlying inflationary pressures. The role of safe stocks with low volatility becomes more prominent in such uncertain market conditions.

In this article, I’ll highlight two of the safest Canadian stocks you can buy today and hold forever to remain well prepared to navigate the uncertain environment. Although these stocks might not make you super rich overnight, they have the potential to keep yielding steady returns on investments, even in tough market environments.

Dollarama stock

Dollarama (TSX: DOL) is a Mont Royal-headquartered value retailer that primarily sells affordable consumable products and general merchandise online and through its large network of 1,525 stores across Canada. The retail company currently has a market cap of $27 billion, as its stock trades at $95.63 per share with nearly 21% year-to-date gains, outperforming the broader market. By comparison, the TSX Composite benchmark is up 4.3% this year.

One of the key factors that make Dollarama a safe stock to hold in tough times is its ability to keep growing despite adverse economic scenarios. Even during the COVID-19 phase, its sales remained largely unaffected, which helped its earnings grow positively.

In the five years between its fiscal year 2018 and 2023 (ended in January), its sales increased by 55% YoY (year over year). More importantly, DOL’s adjusted earnings during the same five-year period jumped by 82%, reflecting its improving profit margins.

Besides these positive factors, the consistent expansion of Dollarama’s store network each year should help its financial growth trend improve further in the long run, making it a safe stock to hold in your portfolio.

MTY Food stock

MTY Food Group (TSX: MTY) is another trustworthy stock to consider right now, especially if you are looking for a Canadian stock with low volatility and strong fundamentals. This Saint-Laurent-based franchiser operates multiple concepts of restaurants globally and currently has a market cap of $1.5 billion.

Despite the ongoing macroeconomic challenges, MTY seemingly continues to be among Bay Street analysts’ favourite TSX stocks, with most of them covering it, recommending either a “buy” or a “hold” on the stock right now. The company’s ability to continue posting solid top-line growth, despite high inflationary pressures, could be one of the reasons behind analysts’ optimism about its stock. For example, while many businesses struggled due to high inflationary pressures and growing interest rates, MTY posted a solid 29.8% YoY increase in its sales in its fiscal year 2022 (ended in November 2022).

In its fiscal year 2023, analysts expect its sales growth rate to improve significantly to around 64% YoY, which should help it deliver positive earnings growth despite challenges driven by the high inflation.

Overall, its solid growth outlook and geographically well-diversified business make it one of the safest stocks to buy in Canada today.