The TSX could duplicate its 2025 performance or even improve on it next year. Market analysts, especially the bears, don’t rule out a correction following a strong bull market. Possible triggers are a weakening economy and job market.
If the possibility of a downturn exists, move toward consumer staples stocks like Loblaw Company (TSX:L) or George Weston Limited (TSX:WN). Both are defensive plays with a deep connection. Whether you pick the subsidiary or the parent company, you can navigate uncertainty.
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Inherently defensive
Loblaw appeals to risk-averse investors for its inherent defensive qualities. You’d be investing in a $71.5 billion food and pharmacy company. Allied businesses include financial services and real estate. At $60.51 per share, the positive market-beating year-to-date return is nearly 29%. The stock comes with a modest 0.91% dividend.
Its president and CEO, Per Bank, said, “Our innovative customer programs and new store openings are delivering the value, quality, service and convenience that Canadians want, now more than ever.” In the third quarter (Q3) of fiscal 2025 (three months ending September 4, 2025), food and drug retail sales went up 4.8% and 3.8% compared to Q3 2024. E-commerce sales rose 18.0% from a year ago.
In the same quarter, revenue and net earnings increased 4.6% and 2.2% year over year, respectively, to $19.4 billion and $794 million. However, free cash flow fell to $396 million from $622 million in Q3 2024. For the full year, management expects Loblaw’s earnings to grow faster than sales after adjustments.
However, the bank also said it expects “slower per person consumption growth, coupled with slower population growth, would mean modest overall consumption growth in the second half of the year.”
Holdings company
George Weston has a 52.44% ownership stake in Loblaw. A second operating segment is Choice Properties, a $10.8 billion real estate investment trust (REIT). The $35.6 billion holdings company combines a strong retail business with a portfolio of income-producing properties.
After three quarters in 2025 (40 weeks ended October 4, 2025), operating income and net earnings increased 22.8% and 25.7% year over year, respectively, to $4.1 billion and $818 million. The highlight in Q3 2025 was the +3,080% jump in net earnings available to common shareholders to $477 million, up $462 million in Q3 2024. It represents a 15.1% growth in adjusted diluted net earnings per common share.
Its chairman and CEO, Galen G. Weston, said, “With our businesses continuing to serve the needs of their customers and tenants while executing on their long-term strategies, George Weston is positioned for continued growth.” WN trades at $92.56 per share, up 25.5% year to date.
Minimize risk and stay ahead of inflation
The Bank of Canada slashed its benchmark last month as a precaution in case the weakness in the jobs market persists. Nonetheless, it believes financial conditions are favourable to spending, although many consumers are cautious. Another rate cut might happen in December.
The advantage of owning Loblaw or George Weston is that people will spend on food and medicines. For Tony Ciero, vice president and senior portfolio manager at Caldwell Securities, you stay ahead of inflation with either stock. You minimize risk because the consumer staples sector is inflation-resistant.
