The Canadian investment landscape is currently navigating a complex inflationary environment. Recent data shows that inflation in Canada eased to 1.8% in February. However, a sudden increase in the U.S. Consumer Price Index to 3.3% in March signals potential volatility ahead, driven by rising energy costs due to geopolitical tensions and tariffs. This situation poses questions for investors regarding robust stock options that can withstand inflationary pressures.
Top 2 Canadian Stocks to Buy Amid Rising Inflation
For Canadian investors seeking stability and growth during uncertain economic times, two stocks stand out: Dollarama (TSX:DOL) and Canadian National Railway (TSX:CNR). Both companies offer resilience against inflation metrics and provide investors with reliable opportunities.
1. Dollarama’s Resilience
Dollarama has proven its mettle as a value retailer. During inflationary periods, consumers often gravitate towards retailers that offer cost-effective options. The company has expanded its footprint aggressively, acquiring the Australian discount chain The Reject Shop and growing its presence in Latin America with Dollarcity.
- Recent Performance: In the third quarter of fiscal 2026, Dollarama reported a 22% increase in sales, reaching $1.91 billion.
- Financial Highlights: EBITDA rose to $612 million, with diluted earnings per share increasing by 19% to $1.17.
- Same-Store Sales Growth: A 6% increase in Canadian same-store sales prompted management to raise their sales guidance for the full year.
Although Dollarama’s market cap stands around $51.8 billion with a P/E ratio near 40, its capacity to attract customers during tight budgets provides justification for its premium valuation, making it a strong candidate in an inflationary climate.
2. Canadian National Railway: A Strong Infrastructure Play
Canadian National Railway (CNR) operates as a vital infrastructure component in North America’s logistics network. The company sustains operations irrespective of consumer sentiments, making it a unique asset in volatile times.
- Fiscal Highlights: In the fourth quarter of 2025, CNR reported a 2% increase in revenue to $4.46 billion and a 9% rise in net income to $1.25 billion.
- Full-Year Performance: Total revenue for the year reached $17.3 billion, and net income was $4.7 billion.
- Capital Investment: The management has set a capital program of $2.8 billion for 2026, reflecting a prudent approach to financial management.
With a market cap approaching $84.2 billion and a P/E ratio near 18, CNR remains a reasonably priced option compared to other high-quality Canadian stocks. Its revenue stream, tied to essential goods transportation like grain and oil, remains robust, even during inflationary cycles.
Investment Outlook
As inflation concerns persist, particularly with recent developments in the U.S. economy, Canadian investors may need to rethink their strategies. Dollarama and Canadian National Railway are not the most glamorous investments, but their solid fundamentals offer a defensive stance against rising inflation.
In conclusion, focusing on these durable stocks could provide Canadian investors with stability and potential growth as they navigate the shifting economic landscape.
