Stock market investors were already wary of rising geopolitical tensions that had been causing disruptions to markets worldwide in 2025. However, 2026 brought with it a violently reshaped situation in the Middle East after the U.S. and Israel attacked Iran, and it retaliated. The entire Gulf region is in a volatile state right now, and oil prices are rising.
There is a greater threat to global supply chains due to the new conflict, and it has triggered a sell-off across the board in markets worldwide. In times of economic turmoil, seasoned investors do not panic. Rather, they treat these situations as opportunities to get the best deals on the stock market. It can be the best time to invest in undervalued stocks to capture potentially substantial long-term gains once the dust settles.
Today, I will discuss two stocks that you should have on your radar, especially if you have money set aside to invest in the market during this period of market volatility.
A person stands in front of several doors representing different U.S. stock options for Canadian investors.
Air Canada
Air Canada (TSX: AC) is a name that needs little introduction for Canadians. The $5.03 billion market-cap giant on the TSX is the flag-carrying Canadian airline. As the nation’s largest airline, it provides domestic and international flights, alongside a cargo division that services hundreds of destinations worldwide.
The world seems to be inching closer to an energy crisis, and that can impact the transportation sector. Despite that, some market analysts consider Air Canada to possibly be a good investment. The company saw its December 2025-ending quarter with impressive results. From a $644 million net loss in Q4 of fiscal 2024, the same quarter in fiscal 2025 saw it report $296 million in net income.
The energy crisis might put pressure on it in the short term. However, the airline looks well-positioned to deliver outsized returns once the dust settles.
Diversified Royalty
Diversified Royalty Corp. (TSX: DIV) is a stock that you can invest in to offset the impact of potential losses from higher-risk investments. Diversified Royalty is a $679.39 million market-cap royalty corporation that acquires top-line royalties from well-managed multi-location businesses and franchisors across North America. Its primary goal is to acquire royalty streams that grow payouts without being too unpredictable.
With its money diversified across several royalty partners, it generates revenue by collecting a small percentage of their sales. The business model has been successful for the business, and its latest earnings report reflects that. The company’s net income in the first three months of 2025 grew by 13.6% compared to the same period last year, as it continues to deliver solid organic growth during these times.
As of this writing, DIV stock trades for $3.99 per share and pays investors $0.02375 per share each quarter, translating to a 7.14% dividend yield that you can lock into your self-directed portfolio today.
Foolish takeaway
If you have $10,000 to invest in the stock market right now, I would not recommend spending it all to buy just two TSX stocks. Diversifying your investment capital across several stocks can be a good way to capture upside potential without taking on unnecessary risk to your capital.
That said, I would advise allocating at least a small portion of it to buying and holding these two TSX stocks. This way, you can balance a higher-risk investment through Air Canada stock with a passive-income-focused investment through Diversified Royalty stock.
