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It has been a busy week. Rising rates and growing recession worries weighed on markets this week, pushing stocks to 52-week lows. However, some Canadian stocks are defying these pressures and are still trading near their all-time highs.
Many energy stocks on the TSX are trading near their record highs. However, they have a strong correlation with oil and gas prices. However, the stocks discussed below have little to no correlation with the broader markets. Thus, they are well positioned for a possible economic downturn.
So is it time to place your bets on these winners amid the market correction? Let’s see.
The stock of Canadian discount retailers Dollarama (TSX:DOL) is 8% off its record highs. The stock has gained 15% this year and has shown immense resilience throughout. Notably, DOL stocks also outperformed broader markets during the pandemic crash.
Dollarama has a massive presence in Canada and operates 1,431 stores. This gives it a significant competitive edge over its peers as well as scale. Additionally, consumers prefer value in inflationary environments, where Dollarama offers an unmatched proposition.
Its healthy long-term financial growth indicates resilience in almost all economic cycles. So its safe-haven appeal will likely continue to drive the stock higher, even if the economy gets uglier from here.
Canada’s Largest P&C Insurer Intact Financial (TSX:IFC) is another stock that has held up against the recent market correction. This year, he has gained 5% and is 8% off his records. In comparison, the TSX Compound Index fell 15% from its all-time highs.
Intact has a 21% market share in P&C insurance in Canada. Its scale gives it a natural competitive advantage over its peers. In addition, it has experienced above-average financial growth over the past few years thanks to its strong expertise in underwriting and claims settlement.
IFC shares also pay stable dividends which currently yield 2.3%. Although not among the juiciest returns, Intact has increased shareholder payouts since 2005, indicating earnings stability.
Stocks like Intact may not offer strong growth opportunities, but they do provide stability during tough times.
Canadian public services
Investors perceive Canadian public services (TSX: CU) as boring due to its slow nature. However, CU stock has outperformed in the recent market turmoil. So far, CU stocks have gained 5%, while TSX stocks as a whole have lost 11% in 2022.
Canadian utilities have good revenue visibility due to the regulated nature of their operations. As a result, it has grown steadily even during recessions and economic booms. That’s why it has consistently increased shareholder dividends every year for the past five decades.
It yields almost 5%, higher than its peers. These juicy dividends will be more valuable in a declining market environment.
CU is not the kind of action that will make you rich overnight. However, for those looking for stable returns with relatively low risk, CU is a suitable bet.