A slowing economy doesn’t make me want to stop investing. It makes me pickier about what I own.
Canada’s economy has spent much of 2026 moving slowly. The Bank of Canada expects gross domestic product (GDP) growth of just 0.7% this year, while employment fell by 42,000 jobs in August. The unemployment rate held at 6.4%.
That doesn’t mean recession is inevitable. Second-quarter growth rebounded sharply. It does mean I want businesses that don’t need Canadians feeling wealthy to keep growing.
Two stocks fit that description.
Source: Getty Images
Spending shifts
Economic slowdowns don’t stop consumer spending. They change where the money goes. Households may postpone vacations, furniture, and expensive purchases while hunting harder for value on everyday products. Businesses and municipalities may trim budgets, but garbage continues piling up.
That’s why I’d focus on companies selling necessities or solving problems customers can’t ignore. It won’t prevent share prices from falling. It can make the businesses underneath them less dependent on the economic cycle. First up is Dollarama (TSX: DOL).
DOL
Dollarama operates 1,734 stores across Canada, with expanding businesses in Latin America, Mexico, and Australia. The Canadian value proposition becomes especially useful when household budgets tighten. Customers can buy cleaning products, food, toiletries, school supplies, and household goods at low prices without changing where they shop every week.
That demand showed up in the latest quarter. Canadian comparable-store sales increased 5.4%, driven by a 3.7% increase in transactions. Diluted earnings per share (EPS) rose 11.2% to $1.29. Management responded by increasing its Canadian comparable-store-sales guidance to between 4% and 4.5% and lifting expected new store openings to between 65 and 75.
The international runway adds another layer. Dollarcity sales increased 30% in its latest quarter, while the network reached 781 stores. Dollarama isn’t cheap. At $178.40, it trades around 34 times forward earnings. Australia is also losing money while management rebuilds the former Reject Shop network. I’m paying for growth here, not a bargain. A slowing economy could make Dollarama’s value-focused model even more useful.
WCN
My second pick solves an even simpler problem. Waste Connections (TSX: WCN) collects, transfers, recycles, and disposes of waste across Canada and the United States. Households still produce garbage in a weak economy. Municipal contracts don’t disappear because GDP growth slows. Businesses can produce less waste when activity weakens, but the essential nature of the service provides a strong base.
Second-quarter revenue increased 6.4% to US$2.56 billion. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 6.8% to US$840 million. Management then raised its 2026 outlook, now expecting revenue between US$10.02 billion and US$10.05 billion and adjusted EBITDA of US$3.33 billion to US$3.34 billion.
Acquisitions provide another growth engine. Waste Connections completed deals representing more than US$100 million in annualized revenue during the first half while repurchasing a record US$614.5 million of its own shares.
Considerations
Neither stock is cheap. Waste Connections trades around 26.5 times forward earnings at $218.93. Dollarama commands an even larger premium. A deeper downturn could pressure commercial waste volumes at WCN and consumer spending at Dollarama, while paying high valuations creates more downside if earnings disappoint.
That’s why I’d build positions over time instead of treating defensive businesses as invincible ones. Investors can also spread risk across diversified Canadian blue-chip stocks rather than betting everything on one economic outcome. Long-term investments held inside a Tax-Free Savings Account (TFSA) can keep eligible gains and dividends tax-free when contribution room is available.
Bottom line
I’m not waiting for Canada’s economy to look perfect before buying stocks. Dollarama benefits when consumers care more about value. Waste Connections gets paid to provide a service communities need in good economies and bad ones.
If growth stays weak, both businesses have ways to keep moving. If the economy improves, I don’t need to sell them. That’s the type of flexibility I want when the economic forecast keeps changing.
