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Top 3 Stocks For A Bear Market

If you want to avoid the risk of losing your investment you should be looking for companies that are more likely to maintain and grow their value regardless of market conditions. To do this successfully, there are certain fundamentals that you should look for, which include but are not limited to: financial health, liquidity and reliable earnings capacity. I suggest starting with Westshore Terminals Investment, Saputo and Gildan Activewear.

Westshore Terminals Investment Corporation (TSX:WTE)

Westshore Terminals Investment Corporation, through its limited partner interests in Westshore Terminals Limited Partnership, operates a coal storage and loading terminal at Roberts Bank, British Columbia in Canada. The company was established in 1970 and with the company’s market cap sitting at CAD CA$1.64B, it falls under the small-cap group.

The company’s capital structureis attractive , with the entire capital base funded by equity investors – meaning zero debt and lower risk of financial distress during tough market conditions. Furthermore, at a CA$1.64B market cap and a PE of 14.1x, there is an adequately liquid market for the stock which is relatively undervalued compared to the market, which minimises the potential for rapid share price falls in down cycles. Seeing that last year’s earnings growth continues the previous 5 years’ positive annual growth trajectory at 17.34% and 14.23% respectively, WTE is a fundamentally strong defensive company. Dig deeper into Westshore Terminals Investment here.

TSX:WTE Income Statement May 12th 18
TSX:WTE Income Statement May 12th 18

Saputo Inc. (TSX:SAP)

Saputo Inc. produces, markets, and distributes various dairy products in Canada, the United States, Argentina, and Australia. Established in 1954, and run by CEO Lino Saputo, the company provides employment to 12,800 people and with the market cap of CAD CA$16.58B, it falls under the large-cap category.

SAP has a robust financial position , due to the high ratio of current assets to long-term liabilities, which is currently at 1.32x. On top of this, cash flow from operations is 30% of total debt, a strong sign, making an investment in the company a safer bet if the cycle turns against you. Moreover, as its price gives it a CA$16.58B value on the market , the company provides higher liquidity to investors, which reduces risk of firm price declines and allows you to sell without a large loss due to unattractive spreads. With that has also been annualised earnings growth of 10.61% for the last 5 years and an even greater 25.81% last year, which demonstrates SAP is a strong candidate for a bear market based on these defensive tenets. More detail on Saputo here.

TSX:SAP Income Statement May 12th 18
TSX:SAP Income Statement May 12th 18

Gildan Activewear Inc. (TSX:GIL)

Gildan Activewear Inc. manufactures and sells a range of apparel products in the United States, Canada, Mexico, Europe, the Asia-Pacific, and Latin America. Started in 1984, and now led by CEO Glenn Chamandy, the company size now stands at 50,000 people and with the market cap of CAD CA$7.87B, it falls under the mid-cap stocks category.

GIL’s financial management makes the company a solid defensive candidate , due to high liquidity with current assets covering liabilities by 1.79x. Additionally, operating cash flow is at a good level relative to overall debt at 68.37%, which provides a safe buffer for servicing debt if difficult conditions prevail in the market. Moreover, as its price gives it a CA$7.87B value on the market , investors have the added benefit of solid liquidity, helping curtail the rate of decline in share price during periods of mass selling. To add to this, the company has grown earnings at 10.23% annually for the past 5 years period, which demonstrates GIL has maintained attractive fundamentals for a defensive portfolio. Interested in Gildan Activewear? Find out more here.

TSX:GIL Income Statement May 12th 18
TSX:GIL Income Statement May 12th 18

For more robust companies to add to your portfolio, explore this interactive list of defensive stocks.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.

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