These TSX stocks all rose by more than 15% in 2022
The possibility of a recession, while not yet official, is a growing concern for many investors in Canada. In times of economic uncertainty, the stock market can become volatile, leading investors to seek out assets that offer stability and a hedge against a downturn.
If you are looking to protect your capital and maintain growth potential, the Canadian market (TSX) offers a selection of stocks that have demonstrated resilience in previous periods of market stress, such as the high-inflation environment and significant market downturn of 2022.
Here are 10 TSX stocks that did well during the last market crash, grouped by their specific sectors.
The Energy Sector: Inflation Hedge and Cash Flow
Oil and gas stocks performed exceptionally well in 2022, primarily due to soaring oil prices, which can act as a natural hedge against inflation. While oil prices are currently lower than their 2022 peak, the consistent global demand for energy makes these companies a relatively safe harbor.
1. Cenovus Energy (CVE)
- 2022 Performance: Up nearly 70%, significantly outperforming the S&P TSX Composite Index, which declined by 9%.
- Investment Thesis: As a major oil and gas producer, Cenovus benefits from higher oil prices. Its recent acquisition of MEG Energy enhances its scale, efficiency, and long-term profitability potential.
- Dividend Yield: Approximately 2.9%.
2. Imperial Oil (IMO)
- 2022 Performance: Rose by approximately 45%.
- Investment Thesis: Imperial Oil is Canada’s largest refiner of petroleum products and owns iconic brands like Esso. Its majority shareholder is ExxonMobil, providing an added layer of long-term stability.
- Dividend Yield: 2.3%.
3. Canadian Natural Resources (CNQ)
- 2022 Performance: Gained 41%.
- Investment Thesis: Canada’s largest individual crude oil producer, CNQ operates on a “long-life, low-decline” asset model, providing consistent production. Its high dividend yield makes it particularly attractive to income-focused investors.
- Dividend Yield: 4.5%.
4. Suncor Energy (SU)
- 2022 Performance: Increased just under 36%.
- Investment Thesis: Suncor is a fully integrated energy company, involved in everything from mining bitumen to refining and selling fuel at the pump through its Petro-Canada network. This vertical integration provides business resilience.
- Dividend Yield: 3.3%.
5. Pembina Pipeline (PPL)
- 2022 Performance: Soared just under 20%.
- Investment Thesis: Pembina’s business is anchored by an extensive pipeline network and highly predictable, fee-based and take-or-pay contracts. This provides significant consistency and stability, making it a reliable choice for long-term income.
- Dividend Yield: 4.9%.
Consumer Staples & Value Retail: Resilience in Downturns
Companies that sell essential goods tend to maintain consistent sales even when consumer spending tightens, as people prioritize necessities.
6. Dollarama (DOL)
- 2022 Performance: Rose by 25%.
- Investment Thesis: As a value retailer, Dollarama is well-positioned to attract budget-conscious shoppers and bargain hunters during an economic downturn. Its expansion into international markets like Mexico and Australia also suggests encouraging long-term growth prospects.
- Investment Focus: Growth and stability, with a low dividend yield of 0.2%.
7. Loblaw Companies (L)
- 2022 Performance: Up over 15%.
- Investment Thesis: Loblaw, the grocery retail giant, sells day-to-day necessities, ensuring consistent demand regardless of economic conditions. The stock’s low beta (under 0.5) indicates low volatility relative to the overall market, making it a safe haven investment.
- Dividend Yield: 0.8%.
8. Saputo (SAP)
- 2022 Performance: Rose just under 18%.
- Investment Thesis: As one of the world’s top dairy processors, the ongoing need for its wide range of products provides stability. Saputo’s consistent business model makes it a safe place to put money when market turmoil is a concern.
- Dividend Yield: 1.9%.
Financials and Industrials: Selective Opportunities
While the financial and industrial sectors can be sensitive to recessions, certain companies with strong business models demonstrated resilience in 2022.
9. Intact Financial (IFC)
- 2022 Performance: Rose by 19%.
- Investment Thesis: Intact is Canada’s largest provider of property and casualty insurance, providing auto and home coverage. Its heavy investment in data science and AI gives it an advantage in optimizing pricing and risk, underpinning its growth strategy.
- Note: Financial stocks can face headwinds in a downturn, but Intact’s proven growth track record makes it a compelling long-term consideration.
10. Bombardier (BBD.B)
- 2022 Performance: Rose by over 24%.
- Investment Thesis: Bombardier is historically a volatile and riskier investment, but recent domestic investment from the Canadian government has fueled strong performance. It was a major winner in 2022, though investors should approach it with caution due to its historical volatility.
- Note: This stock is considered the highest-risk on this list.
These 10 TSX stocks offer investors diverse options for portfolio diversification and stability, even when economic clouds are gathering. Whether you prioritize high dividend income or business resiliency, there are compelling investments to consider during uncertain times.