Market volatility is something that all investors need to account for. While most investors see a market pullback as something undesirable, it presents an opportunity for growth.
Here’s a look at three great stocks to consider for your portfolio, even during a market pullback.
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Growth is standard — irrespective of which way the market goes
Are you familiar with Alimentation Couche-Tard (TSX:ATD)? Couche-Tard is one of the largest gas station and convenience store operators on the planet. Specifically, the company boasts over 14,000 locations in two dozen countries.
But what makes Couche-Tard an impressive buy, even during a market pullback comes down to several unique factors.
First, there’s the defensive moat of what Couche-Tard offers. Gas stations provide a necessary service for which there is no clear alternative. That appeal is compounded when we add on the convenience store factor.
Either way, this provides a steady stream of traffic that feeds on that necessity. And more importantly, it’s helped Couche-Tard to continue growing during times of volatility.
Couche-Tard is one of just a handful of companies that has outperformed the market this year. In fact, year to date the stock is up 20%. Over a two-year period, this rises to 40%.
Despite the stock’s stellar performance, Couche-Tard remains at a respectable price-to-earnings ratio of 17.15. That’s on par with how the company has performed over the trailing five years.
Here’s a defensive titan that every portfolio needs
As defensive as Couche-Tard is, there’s another investment to consider during a market pullback that’s even more defensive. That stock to consider is Fortis (TSX:FTS).
Fortis is one of the largest utilities in North America. The company operates an overwhelmingly regulated business that generates a recurring source of revenue. Those regulated contracts often span decades in duration, making utilities like Fortis solid long-term picks. That stable revenue stream allows Fortis to invest in growth and pay a juicy dividend.
As of the time of writing, Fortis’s quarterly dividend works out to a juicy 4.20% yield. This means that prospective investors with $25,000 to invest can look to generate an income of over $1,000.
Perhaps best of all, investors not ready to draw on that income yet can choose to reinvest those dividends. This will allow them to grow until needed.
Also worth noting is that Fortis provides a juicy uptick to that dividend and has done so for 49 consecutive years.
This stock actually thrives during a market pullback
There’s one business that thrives during a market pullback, and that’s dollar stores. When consumer budgets get stretched, they often trade down to lower-cost retailers, such as dollar stores.
This is where Dollarama (TSX:DOL) emerges as a unique retail stock to buy during any market pullback.
Dollarama is the largest dollar store operator in Canada. The company boasts a network of over 1,500 stores in Canada. Additionally, the company operates a growing portfolio of over 440 stores in several Latin American countries under the Dollar City brand.
Turning to results, Dollarama reported sales of $1,294.5 million in the most recent quarter, the first quarter of fiscal 2024. This works out to a whopping 20.7% increase over the same period last year. That growth was largely attributed to the increased number of stores over the period.
Overall, the company earned $179.9 million, or $0.63 per diluted common share, in the most recent quarter. This represents a bump over the $145.5 million, or $0.49 per diluted common share, reported in the same period last year.
Dollarama also boasts a quarterly dividend, but the 0.33% yield offered is unlikely to entice income-seeking investors. That being said, Dollarama has provided annual increases to that dividend, with growth averaging over 10% over the past decade.
Given the stellar growth of the stock, the growing appeal of its products during a market pullback, and the long-term growth potential, Dollarama is a must-have option for growth investors.
Final thoughts on these market pullback buys
No stock is without some risk, and that includes Dollarama, Fortis, and Couche-Tard. Fortunately, the three stocks mentioned above boast some defensive appeal to investors, particularly during a market pullback.
In my opinion, that makes them great additions to any well-diversified portfolio.
