A well-diversified portfolio has both aggressive and defensive stocks. The aggressive ones provide growth in bullish markets, while defensives offer stability during market downturns. Here’s a portfolio idea that has three TSX stocks to outperform in all-weather markets.
Nuvei
One of the top fintech stocks Nuvei (TSX:NVEI) seems unstoppable this year. It is already up about 55% so far this year and still has the potential to grow. Interestingly, there has been a flurry of positive developments for Nuvei in the last few months, from upbeat quarterly earnings to strategic acquisitions.
Last week, Nuvei announced the acquisition of U.S.-focused gaming and sports wagering payment technology company Mazooma Technical Services. Nuvei operates in 200 markets globally with 150 currencies and helps over 450 payment methods.
The legalization prospects for sports wagering in the U.S. look good, which could bring significantly bigger growth opportunities for Nuvei.
The company posted 46% year-over-year revenue growth in Q4 2020. It reported $21 million in profits in the same quarter against a loss in Q4 2019.
Enbridge
Very few Canadian stocks offer dividend stability like Enbridge (TSX:ENB)(NYSE:ENB) does. Its super-high yield of 7.2% pays decent passive income. It has increased shareholder payouts for the last 26 consecutive years. Notably, its dividend growth not only beat inflation, but also managed to increase dividends by a handsome 10% compounded annually for the last more than two decades.
Enbridge will likely continue to pay such reliable dividends for years. Its low-risk operations facilitate stable cash flows, which fund shareholder payouts. Enbridge intends to grow its dividends by 6% per year for the next few years.
Notably, the company has increased dividends in the 2008 financial crisis and amid the pandemic last year as well.
ENB stock is up almost 35% in the last six months. It is a relatively less volatile stock and offers decent growth prospects.
Air Canada
Air Canada (TSX:AC) could be an attractive reopening play for the post-pandemic world. It received a larger-than-expected bailout package last week. However, AC stock has come down by almost 25% since last month and now trades close to $23.
The flag carrier has burned billions of dollars of cash amid the stringent travel restrictions since last March. It was running out of cash and many experts feared bankruptcy for Air Canada. However, the financial aid from the Canadian government has come at the right time.
A $5.4 billion low-interest loan will help Air Canada weather the crisis even if the air travel demand remains weak for a prolonged period. Though the package will likely dilute Air Canada’s equity by around 10%, it addresses the short-term, bigger problem of liquidity.
After the financial aid, vaccinations could play a major role in Air Canada’s recovery. Faster inoculation is imperative to revive air travel demand and, ultimately, Canada’s airline industry. Notably, Air Canada looks well placed to benefit from the impending travel resumptions. If you are a long-term investor, AC stock can outperform and deliver stellar returns post-pandemic.
