Despite starting 2026 on a solid note, the TSX Composite Index has seen heightened volatility in recent months due mainly to escalating geopolitical conflicts in the Middle East, global trade tensions, and macroeconomic uncertainties. While market pullbacks make investors nervous, history suggests that periods of uncertainty often create the best buying opportunities. When quality businesses temporarily lose momentum along with the broader market, Foolish investors get a chance to buy strong companies at more attractive valuations.
In this article, I’ll highlight two resilient TSX stocks that I believe are currently undervalued and could deliver strong returns in the years ahead.
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Waste Connections stock
In an uncertain market environment, businesses built around essential services tend to perform well – and that’s exactly where Waste Connections (TSX: WCN) has carved its niche over the years. The company provides non-hazardous waste collection, transfer, disposal, recycling, and renewable fuels services to around nine million residential, commercial, and industrial customers across the United States and Canada.
WCN stock currently trades at $209.40 per share after a 13% year-to-date decline, giving the company a market cap of $53 billion. That recent decline could be creating an attractive entry point for long-term investors. Waste Connections also offers a small quarterly dividend with a 0.9% yield.
In the first quarter, the company’s revenue climbed 6.4% year-over-year (YoY) to US$2.4 billion. Its net profit reached US$219 million for the quarter, while adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) rose 8% YoY to US$769 million. Strong execution and strategic acquisitions continued to support this financial growth despite challenging conditions.
Waste Connections has also shown impressive resilience amid geopolitical uncertainty and weather-related disruptions. Its operational consistency remains one of its biggest strengths. Moreover, the company still has multiple long-term growth drivers. It’s increasing its use of artificial intelligence (AI) and technology investments to improve efficiency across operations. It also expects another active year for acquisitions in 2026, backed by a strong pipeline of potential deals.
Combined with its ongoing share repurchases and dividend payments, these initiatives position Waste Connections stock as a reliable long-term compounder for investors seeking stability and growth.
Dollarama stock
Companies that thrive on value tend to hold up well when uncertainty rises, and Dollarama (TSX: DOL) has consistently proven its strength in that environment. This discount retailer operates more than 1,691 stores across Canada while also expanding internationally through its Dollarcity operations and The Reject Shop banner in Australia.
At the time of writing, DOL stock closed at $174.51, with a market cap of nearly $48 billion. Despite its defensive business model, its shares have slipped nearly 15% so far in 2026, making them look cheap to buy for the long term.
In the fourth quarter of its fiscal year 2026 (ended February 1, 2026), Dollarama’s sales surged 11.7% YoY to $2.1 billion with the help of strong comparable store sales growth and continued store expansion. Its adjusted quarterly EBITDA reached $711.5 million, reflecting a healthy margin of 33.9%.
Even with unfavourable weather affecting store traffic, the company continued to attract customers with its affordable pricing and value-focused offerings. In the latest quarter, Dollarama added 75 net new stores in Canada and opened seven additional stores in Australia under The Reject Shop banner. Its international expansion efforts could accelerate its financial growth in the coming years.
Overall, consumers continue looking for affordable everyday products, and that trend could persist regardless of economic conditions. Combined with strong operations and consistent returns to shareholders, Dollarama remains one of the strongest stocks on the TSX today.
