Dollarama
Dollarama (TSX:DOL) is an excellent defensive stock with a propensity for growth given healthy same-store sales, even in a challenging macro environment, and continued store network expansion. Its superior direct sourcing and efficient logistics have reduced costs, allowing the company to offer various consumer products at attractive prices, leading to healthy footfall regardless of the macro environment.
Additionally, the Montreal-based retailer is expanding its store network, with plans to increase its Canadian footprint from 1,665 to 2,200 locations and its Australian network from 395 to 700 stores. Thanks to its efficient capital model, rapid sales growth, shorter payback periods and low maintenance costs, this expansion is well positioned to deliver meaningful growth in both revenue and profit.
In addition, the company has a 60.1% stake in Dollarcity, which operates 658 stores in Latin America. Dollarama also has the option to increase its stake to 70%, while Dollarcity plans to expand its network to 1,050 stores by the end of fiscal 2031. As a result, Dollarcity’s contribution to Dollarama’s net profit is likely to increase in the coming years. Given these robust growth prospects, I remain positive on Dollarama despite the uncertain market environment.
Waste connections
Second on my list is Waste connections (TSX:WCN), a non-hazardous solid waste collection, transfer and disposal company. By operating primarily in exclusive and secondary markets in the United States and Canada, it faces limited competition and benefits from higher margins. The company has expanded its footprint through both organic growth and strategic acquisitions, supporting robust financial performance and steady stock price appreciation. Over the past ten years, Waste Connections has achieved a return of over 540%, which equates to an annualized gain of 20.4%.
Furthermore, with a strong financial position and healthy cash flows, WCN expects to continue its active acquisition strategy in the coming quarters. The company also invests in advanced technologies to improve employee safety, improve operational efficiency and increase overall productivity. Additionally, greater employee engagement and improved safety metrics have helped reduce employee turnover and support margin expansion. Given these positives, I believe WCN remains an attractive buy despite continued pressure from recycled feedstock prices.
Hydro One
Another stock that I consider an excellent buy in the current uncertain environment is Hydro One (TSX:H), a pure-play electric utility focused solely on transmission and distribution, without exposure to commodity price volatility. The company benefits from stable, predictable cash flows, with 99% of its operations subject to rate regulation. Over the past seven years, it has expanded its interest base by 5.4% annually, supporting steady financial growth.
These fundamentals have translated into strong shareholder returns, with the shares up approximately 88% over the past five years – an annualized return of 13.5%. During this period, Hydro One has also increased its dividend by 5.4% annually and currently offers a forward yield of 2.47%.
Looking ahead, the rising demand for electricity is driving further expansion. Hydro One is executing an $11.8 billion capital investment plan that is expected to increase its interest base to $32.1 billion by 2027, representing an annualized growth rate of 6.6%. Supported by this growth, management projects have adjusted earnings per share to grow 6-8% annually through 2027. With its highly regulated asset base and continued expansion initiatives, I believe Hydro One’s upward momentum is well positioned to continue in the coming years.
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