The state of the stock market in March 2024 continues to be highly uncertain. While many consumers and businesses continue to struggle in this economic landscape, the economy has consistently been outperforming expectations and staying hotter than policymakers predicted. So, during these uncertain times, some of the best stocks to buy on the TSX right now are consumer staples.
Consumer staple stocks are some of the best stocks to buy and hold in your portfolio for the long haul, but they are especially ideal to buy in this environment due to their defensive nature.
These businesses, such as grocery and convenience stores, which provide consumers with essential goods and household staples, have historically been quite recession-resistant.
Not only do consumers still need to purchase food and other essential goods whether the economy is performing well or not, but consumer staple stocks can also offset inflationary pressures on their costs by increasing their prices as well.
Therefore, considering that these are some of the most defensive businesses on the TSX, there’s no question they are some of the best to buy now. Plus, if you can find high-quality consumer staple stocks to buy, you should be able to find investments that have attractive long-term growth potential as well.
So, with that in mind, if you’re looking for some of the best stocks to buy on the TSX right now, here’s why North West Company (TSX:NWC), a top consumer staple, is one of the top investments to consider.
Is this the best consumer staple stock on the TSX to buy right now?
There are a handful of high-quality consumer staple stocks on the TSX to buy right now, but there’s no question North West is one of the best of the best.
First off, it operates mainly in remote regions in North America, such as northern Canada and Alaska. In addition, it also operates in the Caribbean.
This is unique because, in these regions, North West often has little competition, making it the go-to spot for consumers living in those areas. It’s also worth noting that many of North West’s locations aren’t just grocery stores but entire supermarkets where in addition to household staples and food it also sells general merchandise.
Another key reason why North West is such an appealing long-term investment and one of the best stocks to buy now is that it even owns its own airline in order to avoid contracting third-party air freight businesses to deliver products to its northern stores.
This not only allows North West to save on shipping costs and boost its profit margins, but it also allows the stock to better mitigate supply-chain disruptions.
How has North West performed recently?
Because North West is a consumer staple stock and it’s proven to have such an impressive business model, it’s not surprising that it has continued to show why it’s so defensive.
In fact, in the last decade, it has only experienced a single year where its sales declined. Furthermore, over that 10-year stretch, North West’s normalized earnings per share (EPS) have grown at a compounded annual growth rate of 7.5%. That’s an exceptional pace, especially for such a reliable and defensive stock like North West.
And when you look at its valuation today, as well as its attractive dividend, it’s clear that North West is one of the best consumer staple stocks on the TSX to buy right now.
With analysts expecting it to earn normalized EPS of $2.82 in 2024, North West currently trades at a forward price-to-earnings ratio of just 14 times earnings. That’s not only cheap for a high-quality and reliable stock like North West, it’s also below its 10-year average of 15.7 times.
Plus, on top of its attractive valuation, North West also pays an annual dividend of $1.56 per share, which equates to a current yield that’s just shy of 4%.
So, if you’re looking for a high-quality TSX stock to buy right now amidst all this uncertainty, not only is North West a highly defensive consumer staple but it’s also undervalued, pays an attractive dividend, and has plenty of long-term growth potential.
