The stock market suffered yet another rough setback on Monday as news broke on China’s response to the latest escalation of the tariff war. Undoubtedly, things could have the potential to get nasty. And with Trump and Xi showing no signs of backing down, investors may wish to consider the broad basket of stability stocks (think the names on the TSX with a lower beta) to help make it through what may very well be a big down year for the S&P 500. Indeed, the TSX Index hasn’t been able to steer clear of the pain, as it shed 0.76% on Monday. Still, that’s not all too bad when you consider the S&P 500 and Nasdaq 100 fell nearly 2.5% in a day.
Of course, things were far worse intraday. As Canadian stocks and the TSX Index look more resilient than their U.S. counterparts, perhaps American investors have more reason to consider TSX stocks with their next big buy, despite the recent weakening of the greenback and the short three-cent surge in the loonie relative to the U.S. dollar (US$0.72 from US$0.69).
Here are two stable TSX stocks for “tariff-ied” investors looking for an easier path forward.
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Loblaw
Loblaw (TSX: L) shares couldn’t be bothered by the further escalation of the Trump trade war with China. The stock rallied an impressive 0.8% on a day that the Nasdaq 100 tumbled 2.5%. Indeed, old-fashioned grocers have had their moment relative to the fast-growing tech stocks that are continuing to give up ground rapidly. While I do think there’s a place in a portfolio for both sorts of stocks, I think that investors may wish to rotate into the defensive, recession-resilient plays for stability in a time of rising volatility.
At writing, L stock goes for 30.82 times trailing price to earnings (P/E). Not exactly cheap. However, the stock is flirting with new all-time highs and could continue higher after its coming quarterly earnings results due in more than a week. Personally, I think Loblaw is a winner poised to keep winning as more consumers aim to “buy Canadian.” Finally, the 1% dividend yield, while small, looks primed to grow at an above-average rate in conjunction with earnings.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX: ATD) gained 0.91% on Monday as investors rushed back into the high-quality consumer staples growth play. Undoubtedly, the stock really lagged last year, but it seems poised to make up for lost time as it moves past further regulatory hurdles preventing a successful takeover of 7-Eleven’s parent company.
Indeed, there are antitrust concerns to iron out, and while things will take time, I think investors should stand behind the strong management team as they aim to make their biggest merger and acquisition splash to date. Sure, it’d be nice if we had more clarity on how Couche-Tard plans to appease regulators.
Either way, ATD stock is cheap at 18.9 times trailing P/E, with a 1.1% dividend yield and could fare well in a year that sees “boring,” predictable companies outperform their pricier, tech-driven growth counterparts. With shares going for a 17% discount, I’d not sleep on this night owl!
