Investors are always looking for quality stocks trading at a discount. After all, buying a great business during temporary weakness can be one of the most rewarding strategies for long-term investors.
That doesn’t mean every declining stock is a bargain. However, several TSX stocks have recently pulled back despite continuing to operate fundamentally resilient businesses. Here are three names investors may want to keep on their watchlists this month.
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Stella-Jones: A defensive compounder on sale
Stella-Jones (TSX: SJ) has fallen by roughly one-third from its February highs. At $67 per share at writing, the stock offers a dividend yield of approximately 2% and trades at a forward price-to-earnings (P/E) multiple of about 13.4.
Stella-Jones manufactures and distributes pressure-treated wood products, with its biggest markets being critical infrastructure. That makes the company quite different from a traditional cyclical lumber producer. Utility poles and railway ties remain essential regardless of economic conditions, helping support relatively predictable demand.
Approximately 77% of trailing-12-month sales come from utility products and railway ties, while residential lumber accounts for about 17%. The company’s significant U.S. exposure — roughly 76% of sales — has made tariff concerns a factor weighing on the stock.
That weakness could ultimately create an opportunity. Stella-Jones has increased its dividend for roughly 20 consecutive years, including a 9.7% increase in February. Investors may want to watch the $60-$65 range to see if it holds those levels.
Empire: Defensive income at a discount
Empire Company (TSX: EMP.A) has declined more than 18% from its 2025 highs. At $45.61 at writing, it trades at a blended P/E of about 13.6 and offers a dividend yield near 2.1%.
The grocery retailer’s defensive business is a major attraction. Consumers need food regardless of whether the economy is booming or struggling, giving Empire a relatively dependable source of recurring revenue.
Its portfolio spans premium, conventional, and value-oriented consumers through banners such as Sobeys, Safeway, IGA, and FreshCo. Meanwhile, Empire’s dividend record adds another reason to watch the stock. It has raised its dividend for roughly three decades, with a 20-year dividend-growth rate of about 8%. Its most recent increase, in June, was approximately 10%.
Brookfield Infrastructure: Income and growth
Brookfield Infrastructure Partners (TSX: BIP.UN) is down roughly 12% from its recent highs. At $51.08 per unit at writing, it offers an attractive cash distribution yield of approximately 4.9%.
The diversified infrastructure owner and operator benefits from assets that are largely contracted, regulated, or inflation-linked/protected. About 85% of its funds from operations (FFO) are supported by these characteristics, while management targets distribution growth of 5% to 9%.
Brookfield Infrastructure also continues to recycle capital, selling mature assets when attractive opportunities arise and redeploying the proceeds into investments with potentially better risk-adjusted returns.
For investors seeking a combination of income, defensive characteristics, and long-term growth, that makes BIP a compelling stock to watch.
The bottom line
Ultimately, a falling share price is not automatically a reason to buy. But when a high-quality business declines while its long-term investment thesis remains intact, the pullback can be worth investigating. Stella-Jones, Empire, and Brookfield Infrastructure each offer different ways to potentially capitalize on market weakness.
