- To safely navigate the current market environment, investors can consider investing in stocks related to relatively safer sectors like utilities, consumer staples and gold.
- Quality stocks from these three sectors can provide resistance against the ongoing market volatility and some future economic fallouts.
- The S&P/ TSX Capped Materials Index climbed by over 13 per cent this year.
To safely navigate the current market environment of high inflation, rate hikes, geopolitical tensions and COVID resurgence, investors can consider investing in stocks related to relatively safer sectors like utilities, consumer staples and gold. Quality stocks from such sectors can provide resistance against the ongoing market volatility to a certain extent as these spaces are likely to not lose much demand amid inflation.
Notably, while the TSX benchmark has fallen by almost three per cent in 2022, these three sectors have gained this year. On that note, let us discuss three TSX stocks that one can explore for safe play.
Hydro One Limited (TSX: H)
Companies in the utility sector provide essential services to consumers, such as water supply and electricity. Due to this, these companies are likely to retain demand despite poor economic conditions. In 2022, the S&P/ TSX Capped Utilities Index swelled by over two per cent.
Hydro One, a large-cap utility company, reported C$ 2.04 billion in revenue in the first three months of fiscal 2022 against C$ 1.81 billion a year ago. The company had a year-over-year (YoY) surge of 15.6 per cent in its earnings per share to C$ 0.52 in Q1 FY2022. Hydro One also hiked its quarterly dividend to C$ 0.28 per share, payable on June 30.
Stocks of Hydro One zoomed by over 17 per cent in 52 weeks and had a Relative Strength Index (RSI) value of 49.62 as of writing on May 9, according to Refinitiv data.
Loblaw Companies Limited (TSX: L)
Like utility providers, companies in the consumer staples space offer necessary goods like food and grocery to consumers. Hence, such stocks can be suitable for low risk-takers who want to play safe. Notably, the S&P/ TSX Capped Consumer Staple Index spiked by over two per cent each in 2022.
Loblaw Companies saw its net earnings rise by C$ 124 million YoY to C$ C$ 437 million in Q1 FY2022. The retailer is set to pay an increased quarterly dividend of C$ 0.405 per share on July 1.
L stock soared by nearly 60 per cent in 12 months and had an RSI value of 43.76 while writing on May 9.
Wheaton Precious Metals Corp (TSX: WPM)
Gold has been set aside as a safe haven asset since ancient times, and hence, investors tend to turn toward gold during market uncertainty. Notably, gold prices rose to around US$ 2053 in early March, while the S&P/ TSX Capped Materials Index climbed by over 13 per cent this year.
Wheaton Precious Metal recorded a revenue of US$ 307.24 million and a net profit of C$ 157.46 million in the first quarter of FY2022. The Canadian precious metal streaming firm is set to pay a quarterly dividend of US$ 0.15 on June 3.
WPM stock grew by over seven per cent in a year. The precious metal stock stood at an RSI value of 35.18, according to Refinitiv.
The stocks mentioned above have relatively outperformed their respective sectors. Investors can widen their exposure with these stocks for long-term compounded gains and dividend income, but of course, after proper research.
Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.