Worried About a Market Pullback? Buy These Defensive Stocks Today

The recent market pullback should spur investors to target defensive stocks like Empire Company Ltd. (TSX:EMP.A) before December.

| More on:

Global markets were pummeled on Friday, November 26, due to the emergence of the Omicron variant. Investors should brace themselves for more volatility, as the global community prepares to tackle this new challenge. Canadians who are worried about a market pullback may want to consider top defensive stocks in late November. Today, I want to look at two of the top options that qualify. Let’s jump in.

Why you can still trust grocery retailers right now

Grocery retailers have been an appealing target since the beginning of the pandemic. These defensive stocks have looked even better as a hedge against surging inflation. Empire Company (TSX:EMP.A) is one of the top players in this space. It owns, affiliates, or franchises brands like IGA, Foodland, Farm Boy, and others. Shares of Empire have climbed 5.4% in 2021 as of close on November 26.

The company unveiled its second-quarter fiscal 2022 results on September 9. Sales increased $271 million year over year to $7.62 billion in Q2 FY2022. Meanwhile, gross profit jumped $63.6 million to $1.91 billion. Empire’s Project Horizon growth plan has met with very strong success, and it predicts continued improvement in the second half of fiscal 2022.

Shares of this defensive stock possess a favourable price-to-earnings (P/E) ratio of 14. Empire last paid out a quarterly dividend of $0.15 per share. That represents a modest 1.6% yield. This is a stock worth snatching up in the face of a market pullback.

Here’s a defensive stock to hold in the face of volatility

Alimentation Couche-Tard (TSX:ATD.B) is a Laval-based company that operates and licenses convenience stores around the world. Fool contributor Joey Frenette suggested this defensive stock for investors in late October. Shares of Alimentation have climbed 6.6% in the year-to-date period. However, the stock has plunged 8.7% week over week. This is a great stock to consider in the face of a market pullback.

In Q1 fiscal 2022, adjusted net earnings fell marginally to $758 million, or $0.71 per share. However, total merchandise and services revenues increased 5.4% from the prior year to $4.1 billion. Its same-store merchandise revenues slipped in North America but achieved growth in all other international regions. Overall, it was a very solid quarter for the convenience store giant.

This defensive stock has an attractive P/E ratio of 15. It last bumped up its quarterly dividend to $0.11 per share, which represents a very modest 0.9% yield.

One more defensive stock to snag today

Waste Connections (TSX:WCN)(NYSE:WCN) is the third defensive stock I’d suggest investors snatch up after the recent market pullback. This company provides waste collection, transfer, disposal, and recycling services in the United States and Canada. Its shares have increased 31% in 2021 as of close on November 26. The stock has dropped 2.9% week over week.

The company released its third-quarter 2021 earnings on October 27. Revenue rose 14% year over year to $1.59 billion. Meanwhile, adjusted free cash flow jumped to $283 million over $240 million in the third quarter of 2020. Waste is not exciting, but this is an industry that is the very definition of essential and is set to grow along with the North American population. This defensive stock offers a quarterly dividend of $0.23 per share, representing a 0.6% yield.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends ALIMENTATION COUCHE-TARD INC.

More on Investing

Canadian dollars in a magnifying glass
Dividend Stocks

Here Are My Top 3 Dividend Stocks to Buy Now

These top dividends stocks have consistently paid and increased their dividends. Further, this trend will continue.

Read more »

Lights glow in a cityscape at night.
Investing

Canadian Infrastructure Stocks to Buy Now

These two Canadian infrastructure stocks offer interesting investment opportunities whether you’re focused on income or price appreciation.

Read more »

A plant grows from coins.
Tech Stocks

3 Growth Stocks Wall Street Might Be Sleeping on, But I’m Not

Don’t miss your chance to load up on these three beaten-down stocks.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Tuesday, November 5

Updates related to the U.S. presidential election will remain on TSX investors’ radar today as the third-quarter corporate earnings season…

Read more »

think thought consider
Tech Stocks

Is CGI Stock a Buy Even With No Dividend Yield?

CGI stock may not have a dividend to speak of. But does that necessarily mean you should ignore this top…

Read more »

A robotic hand interacting with a visual AI touchscreen display.
Tech Stocks

Why Now Is the Time to Invest in Canadian AI Stocks

Are you looking for one of the most solid Canadian AI stocks out there? This one is probably your best…

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

Why AI Stocks Should Be in Every Canadian Investor’s Portfolio

AI stocks continue to be one of the best options out there for long-term investing, especially when considering Canadian options.

Read more »

stock research, analyze data
Bank Stocks

Canadian Bank Stocks: Buy, Sell, or Hold?

There are opportunities and risks on the horizon for the Canadian banks.

Read more »