Navigating Bear Markets: Top TSX Stocks Proven to Outperform

Fortis (TSX:FTS) and Fairfax Financial Holdings (TSX:FFH) are great stock picks to consider in the face of a bear market moment.

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A bear market may or may not be around the corner. After the latest Monday spill in the TSX Index, which ended the day down nearly 2% on the back of lower commodity prices, it certainly seems like investors should be ready to fasten their seatbelts for a choppy finish to 2023!

Undoubtedly, the market waters may be getting rougher, but they’re still worth braving for a shot at solid gains over the long haul. While the next 12-18 months may prove unforgiving, I’d argue that it’s more of a chance for investors to put new money to work on dips to improve their positioning for the next 12-18 years!

Braving a bear market takes courage!

In this piece, we’ll focus on quality Canadian stocks that have proven they can top the broader TSX over the course of many years. In short, they’re winners that have what it takes to keep on winning for many years to come!

As it stands, the TSX Index is now down 7% since its mid-September peak and around 13% from its 2022 highs. Indeed, market corrections can feel painful, given how quickly the downside moves can accumulate. Stocks really do tend to take the elevator down and the escalator up!

Without further ado, let’s consider boring steady retiree staple Fortis (TSX:FTS) and Fairfax Financial Holdings (TSX:FFH), which are headed in opposite directions lately. Both look cheap and ready to outperform longer term, however.


Fortis is a bond proxy-like play that’s really been hurting due to higher interest rates. The stock finished Monday’s session nearly 2% lower as interest rate jitters increased. Undoubtedly, the broader basket of utility stocks has been under pressure lately, and FTS stock hasn’t been immune from the wave of negativity. At $50 and change, shares actually look cheap at 17.1 times trailing price-to-earnings, with a 4.66% dividend yield.

Indeed, the yield has swelled to be more competitive with risk-free rates. However, given the firm’s steady history of dividend growth, I’d look to load up on shares if you’re looking to set your future self up for a nice retirement. The only thing better than a juicy dividend is one that’s poised to grow substantially over time.

If you’re like me and think the utility sell-off is overdone, it’s time to jump into a name like Fortis while it’s down over 21% from its high. Over the past five years, shares are up over 63%, well ahead of the TSX Index’s 20.2%.

Fairfax Financial Holdings

Fairfax was in the green big time on Monday, as the TSX Index sunk further into the abyss. Shares surged nearly 3% on Monday to $1,140 and change. Indeed, the good times keep coming for Prem Watsa (the top boss of Fairfax who’s also known as Canada’s Warren Buffett).

Despite the parabolic past-year rise in the stock, I still think it has the means to keep rallying higher. The firm has the wind to its back as its underwriting track record looks up while Watsa continues to pursue smart investments.

The 1.18% dividend yield may be on the small side, but the gains potential (and skill of Watsa) is the main attraction to the shares, even as they hit fresh highs.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has positions in Fortis. The Motley Fool has positions in and recommends Fairfax Financial. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

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