The Canadian stock market saw a week of rapid decline between April 2 and April 8, 2025, amid developments in the trade war between China and the United States. The S&P/TSX Composite Index dipped by 11.07% within the span of a few days. The announcement from Donald Trump to enact a 90-day pause on tariffs on all other countries suddenly caused a boom.
The Canadian stock market’s benchmark index then shot back up. Between April 8 and May 16, 2025, the index rose by 15.40% and is now hovering around new all-time highs. The latest development in the global trade war has been the joint announcement by the U.S. and China about a reduction in tariffs imposed on one another. It remains to be seen how this situation impacts the tariffs by the U.S. on Canadian goods after the 90-day pause.
There is no way to predict what will happen. The only thing I can say for sure is that the market will continue to be volatile. If you’re worried about the market being shaky and want to protect your investment capital, here are two stocks you can buy to inject some stability into your self-directed investment portfolio.
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Alimentation Couche-Tard
Alimentation Couche-Tard (TSX:ATD) is a $65.45 billion market-cap company that owns and operates a network of convenience stores across several international markets. The company makes most of its revenue through selling groceries, fresh food, beverages, tobacco products, car wash services, quick service restaurants, and several retail products. It also provides road transportation and marine fuels, stationary energy, and chemicals.
Alimentation has been facing headwinds due to an attempted deal to acquire 7-Eleven, which might not come to fruition due to Japanese regulators and their antitrust concerns. If the deal comes through, it can be a major boost for ATD stock. Even if the deal doesn’t materialize, the company stands to benefit from the money it would use for the deal to continue improving operations elsewhere. Either way, it is a stock you can be bullish on in an uncertain market, especially as it trades at an arguably undervalued 16.47 price-to-earnings (P/E) ratio.
Loblaw Companies
Loblaw Companies (TSX:L) is another business in the same industry. The $66.26 billion market-cap company is one of Canada’s largest operators of grocery, pharmacy, and general merchandise stores. It has the biggest presence in Ontario and a sizeable presence in British Columbia and Quebec. Besides its growing retail operations, Loblaw oversees a financial services business offering guaranteed investment certificates and credit card services.
Loblaw has a defensive business model that has helped the business face headwinds. Its focus on essential health products and groceries has allowed the business to generate stable cash flow and grow its revenue over time. The company boasts impressive fundamentals and a strong balance sheet. Trading at an over 30 P/E ratio, it’s not undervalued in any way, but it boasts a solid long-term growth potential.
Foolish takeaway
Even with the situation seemingly improving and the S&P/TSX Composite Index’s performance indicating a bull market, it’s understandable that many investors might look to tilt their portfolios toward more defensive holdings.
The heightened geopolitical and macroeconomic risks right now make consumer defensive stocks worth buying. Against this backdrop, Alimentation Couche-tard stock and Loblaw stock seem like excellent holdings to add to your portfolio.
