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Highlights
- The S&P/TSX Composite Index was down by 104.5 points and closed at 18,729.66.
- Canada's economy will likely experience a mild and short-lived recession next year.
- Mounting concerns about a worldwide recession are increasing the volatility in the market.
Canada's economy will likely experience a mild and short-lived recession next year, according to some market experts. The economic crisis could come due to pressure from high-interest rates and persistent inflation.
On July 6, the main stock index in Canada declined as commodities equities were hurt by falling metal and oil prices. Also, the mounting concerns about a worldwide recession are increasing the volatility in the market.
At the end of the trading session on Wednesday, the S&P/TSX Composite Index was down by 104.5 points and closed at 18,729.66. Whether recession will come or not is uncertain, but there's no harm in preparing yourself for the worst times.
Some analysts believe that investors must reshuffle their portfolios as per the changing market conditions. As people brace themselves for an upcoming recession, they might consider exploring the following stocks:
Canadian Pacific Railway Limited (TSX:CP)
Because of their protective operating models and robust competitive moats, Canadian railways appear to be a trustworthy sector to invest in. Due to its massive market capitalization and solid assets, Canadian Pacific seems to be a stable company. Hence, we have selected this stock for this article.
In the first quarter, Canadian Pacific said it wanted to create the first single-line railway network to connect the United States, Mexico, and Canada.
CP's total revenues were C$ 1.8 billion, and its net income amounted to C$ 590 million in the first quarter of 2022. Meanwhile, the rail company declared a dividend of C$ 0.19 per unit to the shareholders.
Canadian Pacific is backed by its robust assets, which amounted to C$ 67.59 billion in Q1 2022. CP's RSI value was 55.7 at the time of writing, as per EODHD/Others data. This could mean it is above the neutral zone, and the gains are greater than the losses.
Dollarama Inc. (TSX:DOL)
Discount shop Dollarama could perform better than average retailers during recessions because consumers who are pressed for cash become more price-sensitive and begin hunting for less expensive alternatives to the products they buy.
The DOL stock soared 18.1 per cent year-to-date (YTD), clocking a 52-week high of C$ 77.41 on July 6, when the Canadian market dipped significantly.
At the time of writing, the DOL stock was up by 1.1 per cent and trading at C$ 75.2 per share. In Q1 2023, Dollarama's diluted net earnings per share jumped 32.4 per cent year-over-year to C$ 0.49.
Meanwhile, the sales catapulted by 12.4 per cent YoY to C$ 1,072.9 million, and comparable-store sales grew by 7.3 per cent.
Please note, the above content constitutes a very preliminary observation or view based on digital trends 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.
