Canadian equities have delivered an impressive performance this year despite ongoing global economic and political challenges. The TSX Composite Index recently climbed to a new record high of 30,180 points, underscoring the market’s strength.
However, with valuations stretched and economic data showing signs of softening, there’s growing concern that the rally may be running ahead of fundamentals. A slowdown in corporate earnings could quickly trigger volatility if investor sentiment shifts. In this environment, taking a more defensive investment stance may be a smart move. Here are two stable Canadian stocks that could offer resilience in the face of a potential market downturn.
Also Read: Reliable TSX dividend stocks 2025
- Waste Connections (TSX:WCN) — A Durable Business in Any Economy
Waste disposal is a critical service with consistent, non-cyclical demand. Waste Connections, a major waste management provider in Canada and the U.S., operates in a sector with high barriers to entry. Building new waste infrastructure is extremely challenging, meaning companies with established landfills and networks often enjoy regional monopolies and strong pricing power.
While the company isn’t a high-growth story, it steadily expands at a pace well above inflation, supported by predictable cash flows. The stock has declined 13% over the past six months and currently trades at 32× forward earnings, near its 10-year average valuation. Waste Connections is rarely cheap, so pullbacks like this can offer attractive long-term entry points for defensive investors.
Also Read: Best long term Canadian stocks
- Loblaw (TSX:L) — A Reliable Grocery Leader
Loblaw, Canada’s largest grocer, is another strong defensive pick. With broad market coverage and significant scale, Loblaw can offer value to a wide range of consumers, particularly in uncertain economic times. Its loyalty program enhances customer retention, while its operational expertise helps maintain efficiency and competitiveness.
Over the past five years, Loblaw has achieved a 4.5% revenue CAGR and an impressive 24% CAGR in earnings per share, highlighting strong operating leverage. Despite being considered a “boring” business, Loblaw has delivered 25% annualized returns in that same period. The stock is down 3.5% from recent highs, and at 21× earnings, it looks more reasonably priced for long-term investors seeking stability.
Bottom Line:
As markets hit record levels and economic risks rise, shifting some capital toward high-quality, defensive stocks can help protect portfolios. Waste Connections and Loblaw stand out as two resilient Canadian companies capable of weathering volatility while offering steady long-term growth potential.
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