As of this writing, the S&P/TSX Composite Index is up 6.08% from its February 13 level. Before the upward trend, the Canadian benchmark index was quite volatile for over a year amid macroeconomic jitters.
The recent upward trajectory allowed many investors to realize significant capital gains on investments. Many of them missed the opportunity to buy on the dip. Then again, some stock market investors continue looking for stocks lagging behind the broader market to leverage the bull market.
However, not every investor is interested in playing with the ups and downs of a volatile market to their advantage. If you seek stable and recession-resistant stocks for your portfolio, it might be a good idea to look for opportunities in resilient sectors of the economy.
While utility stocks are excellent for this purpose, the relatively flat share price movement does not offer much in capital appreciation.
If you want to invest in recession-resistant businesses that also offer upside through capital gains, consider investing in Canadian food stocks. To this end, I will discuss two Canadian stocks you can consider for your portfolio.
Metro
Metro (TSX: MRU) is a $16.69 billion market capitalization food retailer headquartered in Montreal. The discount food and drug retail stock has a solid business that saw its quarterly revenue grow by 6.5% in its quarter that ended in 2023. In the same period, Metro stock saw same-store sales grow by 3.9% and 6.1% at pharmacies and food service outlets, respectively.
These factors from its quarterly performance suggested that the company is coming out of the inflationary rut with little more than a few scrapes. Additionally, Metro stock raised its dividend by 10.7% year over year.
The management is also committed to reducing outstanding shares, with plans to repurchase up to seven million common shares by November 24, 2024. It means the remaining shareholders will get more equity claims in the stock.
The launch of its automated fresh produce plant and automated distribution centre will lead to significant long-term profitability. As of this writing, Metro stock trades for $73.51 per share, boasting a 1.82% dividend yield.
Loblaw Companies
Loblaw Companies (TSX: L) is a Canadian retailer with a $46.45 billion market capitalization headquartered in Brampton. While Metro stock’s latest quarterly earnings report showed it recovered from the inflationary market, Loblaw stock has already recovered from almost 10 years of underperforming since 2021 to beat the gains that the former garnered in that time.
Loblaw Companies has been on a strong run for a couple of years, despite macroeconomic jitters. It opened more than 30 NoFrills and Maxi stores last year, expanding its retail footprint. It has good momentum in its bid to solidify its position as the largest drug and food retailer in Canada.
Its recent quarter saw a 2.3% and 3.7% year-over-year growth in its earnings and revenue, respectively. Its adjusted earnings per share also grew by 13.6% in the same period, showing that it is quite profitable.
With new pharmacy-based clinics lined up to drive more growth, Loblaw is also aggressively repurchasing its common shares. As of this writing, it trades for $149.84 per share, boasting a 1.19% dividend yield.
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Foolish takeaway
Metro stock has been repurchasing its stock aggressively in light of positive momentum for the business. However, it anticipates flat to lower earnings for fiscal 2024 due to its new launches.
While the offerings will likely drive long-term profitability for the stock, Loblaw stock anticipates faster earnings growth this year and has more bullish guidance for fiscal 2024. It might be a more attractive investment to consider between the two consumer staple stocks.
