Get used to stock market volatility as we inch closer to the end of the 30-day tariff pause. Undoubtedly, it could go either way as Canada and the U.S. look to settle things. Though it’s good to be optimistic, investors should be ready to hang in there as volatility looks to kick things up. Indeed, if you’re a new investor, the wild day-to-day fluctuations may warrant a bit of stabilization.
While taking on a low-beta or low-volatility strategy can only take you so far, I think that new investors who have yet to experience the market’s massive swings should be ready to keep their cool once volatility does strike again. So, if you’re like many investors who’ve put a considerable sum of new money to work in these past two years, you may have no idea what it’s like to ride the stock market rollercoaster on the way down.
Get ready for volatility
Indeed, stocks really do tend to take the stairs up and the elevator down! As such, it’s wise to be prepared with names that can hold their own alongside a bit of extra cash so you can scoop up the marked-down merchandise when Mr. Market is in a spot to hit the panic button over tariff concerns or something else.
Sure, betting big on the defensive dividend stocks can take away from your returns potential on the way up, especially if you’re looking at ultra-defensive plays with betas closer to zero than one (that entails an extremely low-to-no correlation with the TSX Index). Of course, you don’t need to go full-on defensive just because you think the markets are looking toppy or risks make you feel uneasy about being heavily (or fully) invested through 2025.
Instead, it can be prudent to take on a more balanced approach. In this piece, we’ll check out a lower-beta name that could ride higher, regardless of where the TSX Index moves! Call it a “smart beta” stock, if you will, but I think of them as solid long-term holding that investors shouldn’t shy away from whenever the going gets tough!
Couche-Tard: A defensive grower to buy on the dip
One such name I’d be interested in picking up is convenience store operator and consolidator Alimentation Couche-Tard (TSX:ATD). The stock has been dragging its feet in the past year. The drag has continued into 2025, with shares now down 7% (it’s only been one and a half months into the year) for 2025 so far. It’s not a “safe” stock per se, but one that I believe could hold up (or even move up) once the TSX Index is ready to fly south again.
There’s so much uncertainty surrounding what’s to happen with the 7-Eleven deal, especially as other interested parties (including those in Japan) step forward, interested in the convenience store juggernaut. Though only time will tell what’s to happen with the Japanese colossus, I still think investors can seek relative stability in ATD stock, given its recent underperformance. The stock has a 0.89 beta, which entails slightly less market risk.
However, given shares have already corrected rather viciously, I wouldn’t be surprised if ATD gains on market-wide down days. Indeed, it’s become quite lowly correlated lately, making it an interesting defensive growth pick for investors looking for relative stability in a market that could be in for big swings.
