2 Red-Hot Stocks Pulling Their Weight as the TSX Index Soars

Loblaw (TSX:L) and another top stock are pulling their weight amid the TSX Index market rally!

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As the Canadian stock market looks to take a bit of a breather after coming in hot for the first quarter, beginner investors should treat any pullbacks as more of a buying opportunity than a sign that it’s time to book profits and “sell in May and go away,” so to speak.

Indeed, why not get ahead of the herd by selling in April before the sell-in-May crowd has the opportunity to do so?

Just because the TSX Index is fresh off an applaud-worthy first three months to the year doesn’t mean we’re destined for a return to the depths of last year. Looking at the long-term chart, the TSX Index is barely above the highs hit back in early 2022.

After pretty much going nowhere for the past two years, investors shouldn’t worry about excessive froth on the TSX. If anything, broader markets look primed for decent performance as the Bank of Canada (BoC) contemplates a few rate cuts.

Who knows?

Perhaps Canada’s central bank will be the first to cut. If that’s the case, the loonie could take a bit of a hit versus the greenback. Either way, let’s look at two cheap Canadian stocks I wouldn’t be against buying as this TSX market rally looks to enter “new high” mode!


Loblaw (TSX:L) is a Canadian grocery giant that has been skyrocketing year to date, with shares up a whopping 17% year to date (just north of three months). Indeed, Loblaw may have faced harsh criticism for higher food prices amid inflation. And though the firm’s top boss, Galen Weston Jr., doesn’t claim to be succumbing to greedflation, the soaring stock price is certainly not a good look for the firm as it looks to defend its position as the costs of living continue to rocket higher.

At just shy of $150 per share, Loblaw now finds itself up a whopping 125% over the past five years. For a defensive grocer, those are some incredible returns. And while Loblaw has seemingly done well amid Canada’s battle with inflation, I wouldn’t sleep on the name yet as we head into a post-inflation world.

The company isn’t just thriving with its private-label brands; it could harness the power of artificial intelligence (AI) to make things more efficient while offering customers a better experience. Indeed, Loblaw’s trove of data may very well be its hidden advantage as we steer further into the age of AI.

Like it or not, Loblaw is a grocer that’s ready for the new age of tech. As such, I don’t see shares slowing anytime soon — not while it continues to ride on recent quarterly strength.

Hydro One

Hydro One (TSX:H) is another red-hot stock that may be worth checking out if you seek a defensive play that’s almost doubled in the past five years (shares are up 87% in that time span, not including dividends). At 21.55 times trailing price to earnings, H stock doesn’t seem like all too great a deal for a utility play.

When you consider its monopolistic market positioning in Ontario, however, it becomes more apparent that Hydro One is a defensive juggernaut that could make it through almost any rough economic patches. With a nice 2.99% yield, the stock’s a great low-beta buy for the second quarter, in my opinion.

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 no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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