For a Market Volatility Shield, Consider These Canadian Stocks

Markets may be on a high, but risks haven’t disappeared. Here’s a look at two safe Canadian stocks built to weather the storm.

Jitendra Parashar

Author Bio Jitendra Parashar is a financial journalist who has been writing for The Motley Fool Canada since June 2020. With more than 13 years of experience in financial journalism, equity research, and market analysis, he helps investors understand market developments and identify long-term investment opportunities. Before joining The Motley Fool Canada, Jitendra spent several years at Market Realist covering U.S. equities, major economic developments, and developments in the automotive and technology industries. He also worked in commodity and currency research at brokerage firms, gaining insight into how economic trends, central bank decisions, and geopolitical events influence financial markets. Jitendra writes for beginner investors, dividend seekers, and Canadians looking to build wealth over the long term. He also contributes to the daily TSX Today series, explaining key Canadian market developments and highlighting news investors should watch. Based in India, Jitendra follows Canadian and U.S. markets closely. Outside of work, he enjoys travelling in the Himalayas, street and nature photography, and exploring programming and artificial intelligence. Education MBA in Finance and International Business Bachelor's degree in Journalism Areas of Expertise Canadian and U.S. financial markets, long-term equity investing, dividend investing, macroeconomic and geopolitical trends, automotive stocks, emerging technologies, and artificial intelligence. Social Media Profiles LinkedIn Muck Rack Favorite Investment Quote “Simplicity is the master key to financial success.” — John C. Bogle

Published May 27, 2025 9:30 pm EDT

Early signs of easing trade tensions and cooling inflationary pressures have driven the Canadian stock market to new heights in May 2025. Still, we shouldn’t rule out short-term market swings as the macro environment remains shaky and global trade tensions persist.

For Foolish investors looking to build a shield against market volatility, now could be the right time to focus on fundamentally strong, stable Canadian stocks that could thrive even under pressure. In this article, I’ll highlight two such safe stocks that might offer a solid defence without sacrificing the long-term upside potential.

investor looks at volatility chart — Source: Getty Images

CAE stock

CAE (TSX: CAE) is the first stock on my list that you can consider to shield your portfolio from market volatility. This Canadian firm mainly operates across two segments, civil aviation and defence, offering advanced training systems and flight simulators. Following a 30% surge over the last year, CAE stock is currently trading at $36.06 per share with a market cap of $11.5 billion.

Despite macroeconomic uncertainties, CAE managed to finish its fiscal 2025 (ended in March) on a strong note. In the fourth quarter of the fiscal year alone, the company’s total revenue rose 13% YoY (year over year) to $1.27 billion, mainly due to a jump in defence contracts and civil aviation training demand.

Higher revenue, coupled with better cost control and stronger margins, drove its adjusted quarterly earnings sharply up to $0.47 per share. In fact, CAE rebounded from a major operating loss to a profit of nearly $240 million last quarter with the help of improved execution across both business units.

A top factor that makes CAE really attractive in uncertain markets is the steady demand it enjoys from airlines, business jet operators, and defence agencies. Its $20.1 billion order backlog shows just how deeply embedded its services are in the aviation ecosystem.

Moreover, the civil aviation segment continues to benefit from global pilot shortages and mandatory training requirements, while the defence segment is gaining ground from rising military budgets. With a long track record of strong execution and a business model that isn’t overly tied to economic cycles, CAE stock could offer both stability and growth for long-term investors.

NFI stock

Another stock that could help investors stay steady during volatile times is NFI Group (TSX: NFI). It builds all kinds of buses, including electric ones, and operates through manufacturing and aftermarket services segments.

After surging 32% over the last three months, NFI stock is currently trading at $14.77 per share with a market cap of $1.8 billion.

In the latest quarter ended in March, the company’s revenue rose 16.4% YoY to US$841 million with the help of solid demand for its zero-emission buses and better pricing on deliveries. Similarly, its adjusted quarterly earnings before interest, taxes, depreciation, and amortization jumped 84% YoY as margins improved and past cost pressures eased.

Even with some supply challenges around seating, the company posted an adjusted net profit of US$2.9 million last quarter compared to a loss a year ago.

Interestingly, NFI currently has a record US$13.7 billion order backlog, supported by new deals and growing transit demand in North America. With governments pushing for greener transport and NFI expanding its electric lineup, I expect this safe stock to keep riding the momentum no matter what the broader market throws at it.