The Best “Sleep-Well” Stock on the TSX Right Now

Fairfax can be a “sleep-well” stock because it earns money from insurance underwriting and then compounds with its investment portfolio.

Amy Legate-Wolfe

Author Bio

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband.

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Favorite Investment Quote

“October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published February 17, 4:30 pm EST

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Key Points

Its recent results showed strong earnings, rising book value, and a combined ratio below 100, meaning underwriting was profitable.
Higher interest rates can actually help insurers like Fairfax through better investment income, even if markets stay choppy.
The key risk is catastrophe losses or claim-cost inflation, but the valuation suggests much of that worry is already priced in.

Your portfolio should not feel like a horror movie, yet plenty of Canadians treat it that way at 2 a.m. A 2025 Financial Stress Index from FP Canada found 49% of Canadians still lose sleep over financial stress. Another recent benchmark survey summary also tied money worries to anxiety and lost sleep. When the noise gets loud, a “sleep-well” stock is the one that can keep earning through chaos, not the one that wins the hottest trend of the week.

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FFH

That’s why Fairfax Financial Holdings (TSX:FFH) stands out right now. It runs a global property and casualty insurance and reinsurance group, and it invests the float with a long-term mindset. Premiums come in, claims go out, and disciplined underwriting can leave a durable stream of profit. Then the investment portfolio can add another layer of compounding.

Over the last year, Fairfax has kept doing the unsexy work that tends to create real wealth. It didn’t need a miracle product launch. It needed pricing discipline, risk selection, and patience. The share price still moved around, but the model stayed steady. And with an ultra-low beta of just 0.5, it still trades with enough swings to test anyone who refreshes the quote too often.

News flow also stayed practical, which is a nice change in a market that loves drama. In December 2025, Fairfax announced it sold 25,000,000 common shares of Orla Mining at about $17.64 per share for proceeds of roughly $441.1 million. That tells you management will take gains when it likes the price. For a sleep-well holding, that kind of behaviour matters.

Earnings support

The latest quarter gave investors the numbers that calmed nerves. In the third quarter of 2025, Fairfax reported net earnings of US$1.2 billion, or US$52.04 per diluted share, up from US$1.04 billion, or US$42.62, a year earlier. It also reported book value per basic share of US$1,203.65 at Sept. 30, 2025, up 15.1% from year-end 2024 after adjusting for a $20.77 dividend paid earlier in 2025. Book value matters here because long-term returns tend to follow it.

Even better, underwriting did not take a back seat. Fairfax reported a consolidated combined ratio of 92% and an underwriting profit of US$540.3 million on an undiscounted basis in the quarter. That means it made money on the insurance business itself, before you even talk about investment gains. That’s the foundation you want if you are trying to sleep.

Looking forward, the appeal stays simple. It spreads risk across many insurance operations, and it can reprice policies as claims trends change. Higher interest income can also help when yields stay elevated, because it holds a large pool of invested assets. None of this makes it invincible. Catastrophe losses can spike, inflation can raise claim costs, and markets can swing hard. Even so, trading at a cheap 8.4 times earnings and a solid 0.9% dividend yield, it’s a strong, sleep well stock.

Bottom line

So, is Fairfax the best sleep-well Canadian stock on the TSX right now? It could be if you want a business that earns from underwriting discipline and invests with patience, and if you can hold through occasional drawdowns without panicking. It could be the wrong choice if catastrophe headlines make you want to hit sell. For everyone else, the pitch is refreshingly plain: let it do the boring work, and let your nights get quiet again.