Market volatility is an essential part of investing. This generates above-average returns for investors compared to other asset classes such as real estate and fixed income investments.
That said, when times get volatile, some investors want to lean into safer, more defensive names. Here are two top stocks that I think could outperform during a period of severe market uncertainty. So for those concerned about the next recession looming, here are two names I think are worth considering for portfolio insulation.
Barrick Gold
One of the largest gold miners in the world by volume, Barrick Gold (TSX:ABX) remains a top pick of mine for those looking for defensive exposure to the market right now.
When markets get choppy, money often turns into hard assets. And few proxies are as direct as a large, cheap gold producer with a strong balance sheet.
Barrick just reported 2025 revenue of nearly $17 billion, driven by net income of nearly $5 billion, more than doubling the previous year’s profit, while free cash flow nearly tripled. That kind of cash generation, backed by a $2 billion net cash position, gives management plenty of room to continue rewarding shareholders while financing high-return projects throughout the cycle.
Importantly, Barrick is not a story stock. This is a company that has approximately 85 million ounces of proven and probable gold reserves plus growing exposure to copper. I think this gives investors the long-term leverage on metal prices they are looking for without stretching the balance sheet.
As gold’s traditional safe-haven role comes back into focus amid fiscal pressures and geopolitical tensions, many experts believe Barrick Gold’s shares are trading at a discount to fair value. I agree.
Royal Bank of Canada
On the other side of the barbell, Royal Bank of Canada (TSX:RY) offers the kind of earnings stability and dividend reliability that allows investors to sleep at night when indices hit triple digits.
For fiscal 2025, RBC generated net income of more than $20 billion, up approximately 25% year-over-year. These returns were driven by a strong increase in diluted earnings per share, which rose with similar strength in the retail banking, capital markets and asset management sectors. Return on equity was in the high teens (impressive). And the company’s management team has now set an ROE target of more than 17% for 2026, one of the best in the industry.
I think as Royal Bank continues to benefit from its strategic focus on creating cost efficiencies, AI-driven productivity and leveraging synergies from the HSBC Canada acquisition, there is a lot of good to be said about the upside of this business. With a common equity tier 1 ratio of approximately 13.5%, investors can breathe easy knowing that the company is well above regulatory minimum standards.
This gives RBC the flexibility to continue providing credit during a recession, instead of playing defense. Furthermore, RBC’s dividend looks well covered, with a payout ratio of around 40%. So for those looking for exposure to long-term capital growth and dividend stocks, this is a top idea in my books right now as a way to play defense.
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