We would all love to think that a bear market is finally over. In fact, the last two months saw some of the strongest rallies that investors have seen in quite some time! But a bear market is still here, and economists believe the first half of 2024 could still see a recession, though a soft one.
This is why it’s still a great time to consider defensive stocks that should continue to outperform on the TSX during a bear market. So, let’s get into it.
Dollarama
Dollarama (TSX:DOL) may actually provide some value finally these days. The low-cost retailer has long been seen as a strong investment during a bear market and recession. That’s because Canadians seek out the retailer for the lowest prices, as inflation and interest rates remain elevated.
Yet the company saw shares come down slightly recently as the stock announced it would have to increase the costs of many products. This led investors to drop Dollarama stock in response. However, the company will come back around, as same-store sales remain strong, and it’s still offering the lowest prices around.
Dollarama stock is more than just a defensive downturn stock. In a bear market, it does well, but when Canadians get cash in their pockets, they just spend more at Dollarama! So, don’t fear a fall from Dollarama stock in the near future. It’s only going up from here.
Shares of Dollarama stock are up 16% in the last year, as of writing, trading at 4.63 times sales. However, shares are down about 10% as of writing from 52-week highs.
Hydro One
Another strong option to consider during a bear market is companies that will be needed no matter what. That includes utility companies such as Hydro One (TSX:H). There are certainly other longer-term utility stocks that I could mention, but there’s a reason I like Hydro One stock these days.
Part of the reason is because it’s so new. Hydro One stock has only been on the market a couple of years, providing a way to get in on the ground floor to a company that shouldn’t disappear anytime soon — especially as the province of Ontario holds a major stake in the company.
Furthermore, during the shift to clean energy Hydro One stock continues to focus on, well, hydro! So, there’s no fear about losing cash flow during a shift from gas to hydropower. Instead, Hydro One stock can continue focusing on growth and expansion.
Hydro One stock trades up about 7% in the last year as of writing, offering a 3.07% dividend yield as well. It also trades at 3.01 times sales and 1.98 times book value. So, there is still some value to be had with this hydro stock.
Bottom line
If you’re worried about a bear market, I would still consider these defensive stocks on the TSX today. These companies have proven their worth in the last few years. What’s more, they aren’t about to collapse in the near future, even during a bull market. So, certainly consider Dollarama stock and Hydro One stock on the TSX today.
