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Economies around the world are battling the double-edged sword of recession and inflation. Broader indices are down and a lot of investor portfolios have taken hits. If a recession does come to pass, investors will likely look at stocks that will hold up despite the pain.
Top 5 Best TSX Stocks To Buy in a 2023 Recession
Best TSX Stocks To Buy In A Recession
Here are five recession-proof TSX stocks to buy this month.
Metro is a Montreal-based food retailer that is the third-largest food retailer in the country. The company sells a variety of consumer goods under different brands through a chain of around 963 supermarkets and discount stores, plus 650 pharmacies. The Metro stock has demonstrated significant resilience in comparison to the larger market even in this sluggish economy, rising 4.4% so far this year.
The Canadian grocery giant’s most recent quarterly financial results in the current conditions of high inflation have also been impressive. A 9.3% increase from the prior year was reported in the company’s diluted earnings of $198.1 million, or $0.82 per share. Additionally, its same-store sales grew 11.5% year-over-year during the quarter, with pharmacy sales rising by 11%.
All of this has occurred because pharmacy and grocery sales, which account for the majority of the company’s bottom line, fall under the category of necessities. As a result, consumers could not reduce their spending on those items regardless of the state of the market.
Metro is now well-positioned to survive any forthcoming storm as a result of this. Further, the company has also made major expenditures to improve the quality of its online ordering and delivery services, which puts it in a strong position on the technology front.
Headquartered in Toronto, Northland Power develops, constructs, owns, and manages clean and green power infrastructure assets across Asia, Europe, Latin America, North America, and certain other particular jurisdictions. Apart from that, the company is also skilled at developing and running offshore wind farms.
Despite the weak growth in the economy, the Northland stock has increased by more than 11% in the last six months and by 8% so far this year by capitalizing on the worldwide energy crisis. Companies like Northland will now have huge long-term growth prospects as the energy crisis situation becomes more severe in different territories, such as Europe. Additionally, the company’s proficiency in the creation of offshore wind farms is assisting it in securing a number of new projects.
Three gigawatts (GW) of operating producing capacity already exist at Northland, and a further 14 GWs of energy are in the pipeline. Also, according to its most recent financial reports, the company had a net income of $288 million, a 90 percent increase from the prior year. Furthermore, it expects it will be able to double its EBITDA in the coming years, thanks to the development pipeline. Because of this, the market anticipates that this renewable energy stock will be a sure thing in the long run.
3. Canadian National Railway
Canadian National Railway is the country’s Class I freight Railway Company based in Montreal. It runs from Chicago to the Gulf of Mexico on a network of more than 19,500 route miles of track, spanning North America from coast to coast.
Due to the challenging current economic conditions and a decade-high level of inflation, this giant of the railway industry has lost 8% of its value so far this year. However, Canadian National Railway appears to be in a lot more advantageous position, nevertheless, when compared to the overall market and the circumstances that other growth stocks are currently experiencing.
The ability of Canadian National Railway to pay dividends is another motivation to acquire its stock. It is a Dividend aristocrat. Choosing this company can be helpful given the present market conditions of inflation and the fact that any type of passive income is desired, even though the dividend yield of 1.99% might not seem particularly high. The best part of all is that Canadian National Railway has raised its shareholder dividend every year for the previous 25 years and may continue to do so again in the near future.
4. Hydro One
About 1.5 million residential and business customers are served by Hydro One, a Toronto-based electricity transmission and distribution company that runs about 30,000 circuit kilometers of high-voltage transmission lines and 125,000 circuit kilometers` of primary low-voltage distribution network. With a utility monopoly across the country, this leading electric company’s stock price has increased by more than 6% this year.
The financial performance of Hydro One is also strong. The company’s earnings per share ($0.52) were 15% greater than they were the year before, and its sales were $2.04 billion as opposed to the $1.81 billion in the previous year. The market feels that this stock will be ideal to provide steady profits in the subsequent years, given the strength of its operations.
A quarterly dividend of $0.28 per share, or a yield of 3.21%, is another impressive factor about the Hydro One stock. According to the company’s dividend history, it has delivered dividend growth every year since its inception. Further, considering the improvement of its financials, it appears the company will be able to continue this pattern even in the foreseeable future.
Emera is an international energy holding corporation with headquarters in Nova Scotia that produces, transmits, and distributes power to an array of customers. It has numerous divisions, including Florida Electric Utility, Canadian Electric Utilities, and others, and uses a variety of energy sources to produce electricity, including coal, natural gas, oil, hydropower, wind, solar, and so on.
Despite the dire macroeconomic environment, the company’s shares have only plummeted by 3% so far this year. The company is already risk-averse largely due to its dependable position in the utility sector. Besides, its geographic diversity has further reduced its risk exposure.
However, as a result of the downturn in the economy, Emera’s adjusted net income for the first quarter of this year was $242 million, or $0.92 per share, down slightly from the $243 million, or $0.96 per share, it had produced the year prior. But in order to increase its base rate, continue the clean energy transition and maintain the expansion of its annual dividend, which is now yielding at 4.38%, it will be investing $3 billion in Capex.
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