7 TSX consumer defensive stocks to explore right now: DOL to JWEL

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 7 TSX consumer defensive stocks to explore right now: DOL to JWEL
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Highlights

  • Canada’s main equity index saw another triple-digit decrease this week
  • Dollarama stock surged by over 47 per cent in nine months
  • Loblaw stock shot up by approximately 31 per cent in 52 weeks

The anticipation around further interest rate hikes seems to be causing widespread recession fear and broadly affecting investment sentiments. Consumer defensive stocks like Dollarama (TSX: DOL), Loblaw (TSX: L), Metro (TSX: MRU) etc. could help investors live through these current market dynamics. 

Canada’s main equity index saw another triple-digit decrease this week as it slipped by 323.22 points to 19,512.9 at market close on Tuesday, August 31, after falling by 299.05 points on Monday. Market volatility could continue to prevail in the near future unless inflation cools down. Hence, consumer defensive stocks could be a healthy option for investors with a long-term view or limited risk appetite.

Kalkine Media® has come up with the following eight TSX consumer stocks that one can look at amid the prevailing circumstances. 

1.     Dollarama Inc (TSX: DOL)

Dollarama saw a double-digit increase in customer traffic along with ‘strong’ demand for everyday and seasonal consumer products in the initial phase of Q1 FY2023 as the pandemic restriction lifted. Dollarama revealed that Dollarcity had 358 stores in total as of March 31 this year, an increase from 350 stores recorded on December 31, 2021.

On the financial front, the large-cap retail company posted a net income of C$ 145.5 million in the first quarter of fiscal 2023 compared to C$ 113.6 million in the previous year’s same quarter.

Dollarama stock surged by over 47 per cent in nine months. DOL stock also gained by about 28 per cent year-to-date (YTD). As per Refinitiv data, DOL stock recorded a Relative Strength Index (RSI) value of 59.42 on August 30, which reflects a medium-to-high trend.

2.     Loblaw Companies Limited (TSX: L)

While delivering its Q2 2022 financial results, Loblaw Companies said that its drug retail performance kept supporting overall margin expansion and food retail continued a positive trend along with Loblaw’s conventional stores.

In Q2 2022, its drug retail sales were C$ 3.64 billion, reflecting a year-over-year (YoY) increase of 5.6 per cent, whereas its food retail sales amounted to C$ 8.98 billion in the latest quarter, up by 0.9 per cent from Q2 2021. Loblaw posted consolidated revenue of C$ 12.84 billion in the second quarter this year, comparatively higher than C$ 12.49 in the same period a year earlier.

Loblaw stock shot up by approximately 31 per cent in 52 weeks. As per Refinitiv data, L stock appears to be on a moderate momentum as its RSI value was around 42.59 on August 30.

3.     Empire Company Limited (TSX: EMP.A)

Empire Company said that strategic initiatives under Project Horizon launched in 2021 continued to impact the company’s earnings in fiscal 2022 "positively". However, such benefits were partly offset by planned investment in Empire’s e-commerce footprint.

Empire Company reported sales of C$ 7.84 billion in Q2 2022 relative to C$ 6.92 billion in the second quarter of last year. The mid-cap retailer saw its net income increase by 6.6 per cent YoY to C$ 178.5 million in the latest quarter.

Empire stock shot up by almost four per cent in nine months. As per Refinitiv findings, the EMP.A scrip had an RSI value standing at 39.01 on August 30, up from the oversold mark of 30.

TSX consumer defensive stocks to explore right now: DOL to JWEL ©Kalkine Media®; ©Garis Studio via Canva.com

4.     Metro Inc (TSX: MRU)

Metro saw its top line increase by 2.5 per cent YoY to C$ 5.86 billion in Q3 2022. The grocery retailer revealed that its food same-store sales dropped by 1.1 per cent YoY while online food sales remained constant in the latest quarter. 

Metro highlighted that its food basket inflation was approximately 8.5 per cent in Q3 2022 compared to Q2 2022. On the other side, the Canadian enterprise said that its pharmacy same-store sales jumped by 7.2 per cent YoY in the third quarter this year, with a 5.6 per cent growth in prescription drugs due to COVID.

Metro stock zoomed by over 14 per cent in nine months. on August 30, the MRU stock held an RSI value of 42.63, representing a moderate trend.

5.     George Weston Limited (TSX: WN)

George Weston posted C$ 12.97 billion in revenue in the second quarter of 2022, reflecting an increase of C$ 342 million from the prior year's second quarter.

In the latest quarter, George Weston saw its net profit available to shareholders grow by 487 per cent YoY to C$ 650 million. Furthermore, the large-cap consumer defensive company is set to dole out a quarterly dividend of C$ 0.66 on October 1.

As for its stock performance, George Weston stock rose by over three per cent YTD. WN stock appears to be on a mixed trend since March. On August 30, it held an RSI value of 40.95, signaling a moderate market situation.

6.     North West Company Inc (TSX: NWC)

North West Company reported consolidated sales of C$ 552 million in Q1 2022, up by 0.2 per cent YoY. The company said that this slight surge in sales came as increased sales in international operations and the 'positive' impact of foreign exchange on international sales were mainly offset by decreased sales in Canadian operations.

North West stated that its net profit reduced to C$ 28.2 million in the latest quarter when compared with C$ 40.3 million posted in the first quarter this year.

North West stock spiked by over three per cent quarter-to-date (QTD). As per Refinitiv data, the NWC stock had an RSI value of 44.45 on August 20.

7.     Jamieson Wellness Inc (TSX: JWEL)

Jamieson Wellness is a small-cap firm that produces, markets and distributes natural health products like supplements, vitamins etc.

The consumer packaged goods (CPG) company said that its revenue climbed 1.3 per cent YoY to 111.99 million in Q2 2022. This is said to have been helped by a 6.5 per cent surge in the Jamison Brands division, which was offset by a 13.8 per cent drop in the Strategic Partners division.

Jamieson raised its revenue guidance range for fiscal 2022 to C$ 555 million and C$ 565 million. These updated revenue expectations reflected an annual surge of five per cent to nine per cent in the base business in addition to a revenue rise of 16 per cent expected to result from the Nutrawise acquisition.

Jamieson Wellness rose by nearly six per cent in three months. As per Refinitiv data on August 30, the JWEL stock had an RSI value of 49.32.

Bottomline

Canada’s main stock index dipped by about eight per cent in 2022 as economic uncertainties continue to take a toll on investors’ sentiments. However, equity investors could explore these TSX consumer defensive stocks amid the ongoing market conditions for long-term gains in the future.

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.

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