Defensive Stocks

Defensive Stocks

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Many of our North American Stock Indexes are currently at an all time high. If you are like me you may be worried about the next big crash in the markets. As such I am currently focused on having a portion of my portfolio in defensive stocks !

In this mind frame, when I came across Jason Del Vicario’s recent top picks on BNN it resonated with me.

He recommended :

  • Dollarama DOL.TO  – people will continue to shop here even in times of recession, they are targeting growth in Central America ( Newer source of revenue) and have a different shopping experience compared to similar sores in US ( barrier to entry for US Dollar Stores).  At the current trading price of $122.20 and a price target of $140 – this gives investors an upside of 14% .
  •  iShares 20+ Year Treasury Bond ETF TLT    – Inversely correlated with equities  and a hedge against equity/risk.
  • Ross Stores ROST  – During the 2008 crisis only one company had a positive return on the S&P 500 – ROST . When other retailers struggle and close – Ross is able to obtain diversified inventory at a cheaper price and customers shop more at these type of stores during rough economic times.

Some of my past defensive investment recommendations :

  •  Intact Financial Corporation IFC –  I have held this stock since 2016 – you can find my initial analysis here.  From that article, ” It is considered a defensive buy because insurance industry premium growth is not related to economic growth, this stock will not suffer from a bad economy like a bank or other financial stocks, and it has a long track record of growth and profitability. ” . I bought this stock at $83.52  and it is currently trading @ $96.25 for a return of 15% .  Might be time to sell – a topic for another post !
  • GOLD – Gold has historically gone up when the markets have gone down. This article captures Gold’s performance vs S&P 500 performance during times of large decline in the markets. It is a great read.  In simple terms, Gold goes up during time of uncertainty due to flight to safety ! This is a post I wrote earlier on how to invest in Gold   – just in case you need some help on how to get started in Gold investing.

No one can predict when the next crash might be or where it might be coming from – hence why many people recommend diversification in your portfolio. If you have a percentage of growth stocks in your portfolio – it is a good idea to have some defensive stocks as well.   I am okay to give up some percentage of my returns for safety !

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