2026 has emerged as one of the most tumultuous years in stock market history, characterized by pronounced volatility and unpredictability since the onset of COVID-19. Investors today face numerous challenges, making it a daunting task to navigate this economic landscape. However, amidst the chaos, certain stocks have established themselves as reliable options, consistently delivering robust performance year after year.
For those seeking stability during these unpredictable times, two defensive stocks are particularly noteworthy.
Loblaw Companies, with a market capitalization of $71.5 billion, stands as Canada’s largest grocery and pharmacy provider. In light of rising food inflation, investing in Loblaw seems strategic, given its ability to potentially offset inflation-related losses. Over the past five years, the stock has impressively surged by 250%, outperforming inflation significantly. While the company’s revenue has increased at a mid-single-digit rate, its earnings per share (EPS) have expanded at a remarkable compounded annual growth rate of 23%. Share buybacks have greatly contributed to this growth; since 2021, Loblaw has repurchased around 3.5% of its shares annually.
This well-managed business enjoys substantial advantages, including scale, pricing power, and a robust loyalty program. These factors, combined with its diversification across various brands and regions, solidify its position as a leader in essential goods within Canada. Despite the elevated current valuation, marked by a price-to-earnings (P/E) ratio of 24—higher than its 10-year average of 17—investors must be aware that future valuation gains may be limited, even though the company is arguably in a stronger position than it was a decade ago.
In addition, Waste Connections, which boasts a market cap of $56 billion, presents another defensive holding option during these volatile times. Although its stock has faced challenges this year, declining by 9%, it offers essential services that are critical to both consumers and businesses alike. The importance of waste removal becomes abundantly clear when one misses a garbage collection day.
Historically, Waste Connections has been a source of consistent shareholder value, achieving a compounded annual growth rate of 13.8% over the past ten years. Its revenue has risen at an 11.7% compounded annual rate in the past five years, while EPS has grown impressively at a compounded rate of 39%. The company has also been known for its strategic acquisitions and consistent organic growth.
Despite facing setbacks due to environmental issues at a California landfill over the past couple of years, there is potential for the stock to return to its historical growth patterns once those challenges are resolved. Currently trading at one of its lowest P/E ratios in the last five years, this recent pullback might offer an appealing opportunity for investors seeking a low-volatility stock.
While both Loblaw Companies and Waste Connections emerge as strong contenders for those aiming to anchor a defensive portfolio in 2026, there are other high-potential stocks that investors may want to consider. Despite Loblaw not making the cut for the top 10 TSX stocks identified for potential monster returns in the coming years, names like MercadoLibre have proven to deliver exceptional returns.
As the market continues to navigate these unpredictable waters, the focus for many remains on finding reliable investments that can weather the storm, and these two stocks certainly fit the bill.
