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The S&P/TSX Index has seen a drop of over 2% from 21,610 on November 26 to 21,110. The reason for it is the rise of the new COVID variant which has caused chaos across financial markets.
Markets are expected to be volatile for some time now and investors will look for safe havens as they tumble, fall and rise. Here are four stocks that have proven their resilience over markets.
Waste Connections
Top Four TSX Stocks To Buy As The New COVID Omicron Variant Fear Rises
COVID or not, people’s waste still has to get disposed of. Waste Connections stock has gained almost 31% in 2021 after remaining stable for the whole of 2020. 2022 could be a breakout year for the stock with analysts setting the target for the stock at $191.64, an upside of almost 9.5%.
When the company reported its numbers for the third quarter of 2020, it said, “Strong execution, accelerating solid waste pricing growth and continued strength in both resource recovery values and acquisition activity again drive outsized results and increased full-year outlook.”
Revenue came in at $1.6 billion, up almost 15% compared to the corresponding period last year when it clocked $1.4 billion, beating estimates. Waste Connections also closed acquisitions worth around $240 million in annualized revenues. It increased the quarterly dividend by 12.2%
Guidance for the full year 2021 included revenue outlook of “…approximately $6.1 billion, net income of approximately $633 million, adjusted EBITDA(b) of approximately $1.910 billion, net cash from operating activities of approximately $1.689 billion and adjusted free cash flow of approximately $1.025 billion.”
After the company reported its numbers for Q3, analysts raised their estimates for the stock. All numbers in the link are based on the company’s price in USD, listed on the NYSE. The stock closed at $137.19 at the time of this article.
Fortis
Fortis is one of Canada’s biggest utility players, and just like Waste Connections, a lockdown will have little impact on its finances. Companies like these outperform in volatile markets. The stock has gained 9.4% in 2021 so far.
It announced its numbers for the third quarter of 2021 in October. Net earnings came in at $295 million. Its capital plan of $3.8 billion for 2021 is on track after having invested $2.6 billion until the end of September. It announced a capital plan of $30 billion from 2022-2026, an increase of 6% in its base rate.
Most importantly, it announced a dividend hike of around 6% which marks 48 straight years of dividend growth. Amid recessions, epidemics, and financial crises, Fortis keeps chugging along. Its forward yield is currently at 3.83%. The company also affirmed a dividend increase of 6% through 2025. Few companies can give guidance for multiple years, and fewer can be taken at their word. Fortis is one of them.
The stock price moves up slowly but steadily, and its dividends are the closest thing to certainty in markets to today. These factors make it a great option to hold in tough times.
Loblaw
This company is Canada’s largest grocer and its third-quarter results beat analyst expectations handsomely. Analysts were expecting EPS (earnings per share) of $0.21 and Loblaw delivered $0.35. This was on the back of strong demand in both its online as well as physical locations.
Revenue came in at just over $16 billion for the quarter, an increase of $379 million compared to the corresponding quarter in 2020. It said that its two-year sales CAGR (compounded annual growth rate) was 4.5% and 5.5% for the food retail and drug retail segments, respectively.
Loblaw added that its online sales are on track to cross $3 billion for 2021, higher than the $2.8 billion it recorded in 2020. A Reuters report said Loblaw “…now expects adjusted profit per share to rise by the low-to-mid thirty percent range, compared with a prior forecast of low-to-mid-twenties percentage growth.”
An important point to keep in mind is that these numbers come on the back of easing restrictions across several parts of Canada, the holiday season, and the reopening of schools. However, when you are the country’s largest grocer, it is inevitable that most grocery sales during a lockdown will take place on your counters and online website.
People will continue to buy groceries and other essential items at Loblaw which makes it a perfect stock to hold at this time.
Algonquin Power & Utilities
This clean energy stock has struggled in 2021, losing over 19% so far. However, renewable energy is always a good bet, and a solid utility company like Algonquin with stable revenue is a good buy.
Quarters 2 and 3 in 2021 saw earnings drop from a very good quarter one. The company’s recent acquisition of Kentucky Power in October 2021 was also not welcomed by the markets.
However, when compared to the corresponding quarter of 2020, revenue in Q3 2021 rose 40% to $528.6 million. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was $252 million, 27% higher than last year.
The company has a very good dividend yield of 4.84% and analysts have a target of $21.66 on the stock that’s a potential upside of over 23%.
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