The Toronto Stock Exchange (TSX) is showing signs of recovery after the coronavirus-induced selloff in March. However, not all Canadian stocks have performed well. As an investor, you can protect your wealth by investing in names that are likely to be sheltered from the economic fallout of the global pandemic.
Here are five equities that are a safe bet for Canadians during the pandemic.
- Thomson Reuters Corp. (TSX: TRI)
The Canadian multinational conglomerate may be flying under the radar of many investors. But it is a big player in the electronic news and information space.
TRI is a safe play during this global health crisis because of its subscription-based model. Thomson Reuters serves clients in a wide array of industries including business, medical, and legal that require critical data to get their competitive edge. An argument can be made that demand for TRI’s services will soar as companies navigate the complex landscape of a world mired in COVID-19.
From a fundamental standpoint, TRI is one of the few Canadian companies expected to generate increased revenue this year, as much as 2%. The stock also pays out a generous dividend of 2.29%.
From a technical perspective, TRI is in a strong multi-year uptrend. The stock has also made a strong recovery after the March selloff. TRI is likely to consolidate in the coming months, which will allow investors to buy on dips.
- Hydro One Ltd. (TSX: H)
If you’re looking for a name that can safeguard your wealth against market volatility, Hydro One is one of the safest bets.
Hydro One is an energy giant that transmits and distributes electricity to Ontario residents. The company’s transmission lines virtually cover the entire province. It generates revenue by transporting electricity from power plants to Ontario’s businesses and residents.
Demand for electricity remains strong even in the midst of an economic downturn. The company also has strong net income growth. From 2018 to 2019, Hydro One turned the corner after reversing a loss of 65 million CAD due to high deferred domestic income taxes into a net income of 802 million CAD.
The stock has also made an impressive resurgence after the panic in March. A V-shaped is not out of the equation but expect H to consolidate between 25 CAD and 27 CAD before moving higher.
- Fortis Inc. (TSX: FTS)
This Canadian gas and utility holding company offers a blend of stability and long-term growth. Fortis Inc. (FTS) is one of the largest electric utility companies in North America with a strong foothold in Canada, the United States, and the Carribean. Just like Hydro One, Fortis is insulated from recessions and global pandemics as demand for utility services is largely unaffected.
During the 2008 crisis, FTS recovered to its pre-recession value in less than a year after bottoming out. Since then, the stock has enjoyed a strong multi-year uptrend.
This time around, it is possible for FTS to recapture its all-time high at a faster rate. Especially after a strong recovery from the March selloff. Even if the stock consolidates for the rest of the year, investors still get to receive a respectable dividend of 3.6%.
- Jamieson Wellness (TSX: JWEL)
JWEL is a rare stock that ignored the stock market crash in March. Shares of the natural health products manufacturer and distributor are up over 23% year-to-date. The stock likely has more upside potential as consumers invest in vitamins, minerals, and supplements in an effort to boost their immune system against COVID-19.
The company’s growing revenue attests to the soaring demand for its products. The revenue of Jamieson Wellness exploded from 230.87 million CAD in 2015 to 344.98 million CAD in 2019 for a 50% increase in five years.
Also, in the first quarter of 2020, the company posted an adjusted net income of $7.8 million. This represents 20% growth compared to the same period last year as health and wellness became a priority among consumers. Jamieson Wellness is also maintaining its outlook for fiscal 2020 and predicts a net revenue growth of between 5.5% to 9%.
- Shopify (TSX: SHOP)
Another company that’s seeing its business soar in the midst of the pandemic is Shopify. The company helps brick and mortar stores set up and run online stores to compete against tech giant Amazon.
In its most recent earnings call, Shopify reported a year-over-year growth of 47% in revenue. CFO Harley Finkelstein said that the company plans to attract larger merchants this year while growing Shopify merchant solutions. The e-commerce software firm is also expanding its repertoire of services to help businesses with shipping, inventory management, and payments.
The company’s growth is reflected on its skyrocketing value. SHOP is up nearly 90% year-to-date. With the firm’s tremendous run this year, it is now the second-largest company in Canada, behind the banking titan Royal Bank of Canada.
Shopify is a high-growth pick with high risk and is a buy on dips candidate. The e-commerce platform is likely to grow as more brick and mortar stores develop their online presence amid the COVID-19 pandemic.
Disclaimer: The above should not be considered investment or trading advice. The writer does not own any stocks of the companies mentioned.
Kiril is a CFA Charterholder who is passionate about the financial markets and analyzing different opportunities for investors. He specializes in researching and reporting on equities, ETFs, mutual funds as well as commentary on different market trends.