When markets get volatile, or uncertainty starts to build, many investors immediately think about moving to cash or piling into ultra-defensive stocks. And while reducing risk can make sense in certain environments, going too far in that direction can also mean sacrificing long-term growth. That’s the trade-off most Canadian investors struggle with.
On the one hand, you want stability in your portfolio and protection during market pullbacks. On the other hand, you also don’t want to give up the upside potential that high-quality stocks provide over time. That’s where defensive growth stocks come in.
Defensive growth stocks are businesses that operate in essential or resilient industries, generate reliable cash flow, and have proven they can perform through different economic environments.
However, unlike purely defensive names that barely grow, these companies also have meaningful long-term expansion opportunities.
That means they can help stabilize your portfolio when volatility spikes, but they’re also capable of compounding earnings and driving capital appreciation over the long haul.
So, if you’re looking to shore up your portfolio without giving up growth potential, here are three defensive growth stocks that Canadian investors can buy right now.
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An impressive growth-by-acquisition stock
If you’re looking for defensive growth stocks that can help shore up your portfolio GFL Environmental (TSX:GFL) is undoubtedly a top choice.
The company operates in the environmental services industry, providing waste collection, recycling, and environmental solutions across North America. These services are essential. Businesses and households don’t stop producing waste during economic slowdowns, meaning that GFL’s operations are incredibly defensive.
At the same time, though, GFL continues to have significant long-term growth potential. In recent years, it has grown rapidly through acquisitions and continues to expand its footprint while improving margins and generating stronger free cash flow.
Therefore, as it continues to scale and integrate past acquisitions, its profitability will continue to improve, which is what makes it one of the best stocks that Canadian investors can buy today.
In fact, in just the last five years, its revenue has increased at a compound annual growth rate (CAGR) of 9.5%, and its earnings before interest, taxes, depreciation, and amortization (EBITDA) have increased at a CAGR of 13%, showing what a reliable defensive growth stock that it is.
A reliable health and wellness stock for Canadian investors
In addition to GFL, another high-quality Canadian stock that investors can buy today is Jamieson Wellness (TSX:JWEL).
Jamieson operates in the vitamins, minerals, and supplements market, which has proven to be both resilient and supported by long-term consumer trends.
Demand for preventative healthcare and wellness products doesn’t disappear in tougher economic periods. If anything, consumers tend to prioritize health regardless of broader conditions. That defensiveness makes Jamieson one of the best and most reliable growth stocks to have confidence in owning for the long haul.
However, even with how defensive and reliable Jamieson’s operations are, the stock still has a ton of growth potential over the coming years.
Not only should it continue to see industry tailwinds and health and wellness products continue to become more popular, but the company also continues to expand internationally and invest in product innovation.
In fact, in just the last five years alone, its revenue has grown at a CAGR of 15.3%, while its normalized earnings per share (EPS) have increased at a CAGR of 9.9%.
The best defensive growth stock that Canadian investors can buy
Finally, while GFL and Jamieson are two of the highest-quality defensive growth stocks in Canada, there’s no question Dollarama (TSX:DOL) is the best of the best.
When economic conditions weaken, consumers trade down and flock to discount retailers like Dollarama. However, even when conditions improve, Dollarama’s everyday low-price model still attracts shoppers looking for value.
Dollarama isn’t just defensive, though. It’s also one of the best and most consistent growth stocks on the market; that isn’t just expanding domestically anymore, it’s rapidly growing its operations internationally now as well.
And if you thought the growth that GFL and Jamieson achieved over the last five years, Dollarama’s normalized EPS have grown at a CAGR of 18.6% over that stretch.
So, if you’re looking for stocks that can protect your capital and grow it significantly, there’s no question that Dollarama is a top choice for Canadian investors today.
