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These stocks will help your portfolio keep an even keel Add to ...

Tim Hortons plays solid defence, but so do Enbridge, BCE and Shaw Communications.

The Portfolio Strategy column's latest survey of stock market risk suggests this group of stocks were among the least volatile in the Canadian market this week.

There's no such thing as a safe stock. But there are many levels of risk in the stock market, and there's no better tool for analyzing them than a website called RiskGrades.com. In the Canadian market, RiskGrades tells us that bonds are less than half as risky as stocks. Globally, this free website indicates that U.S. stocks are riskier than Canadian stocks, and that the global markets are still more dangerous.

The appeal of RiskGrades is that it allows users to make comparisons of risk between investments of all kinds, all points of origin and all currencies. It does this through a two-step process that assesses the variation in the price of an individual security and then compares it to the volatility of a basket of global stocks. Cash has a RiskGrade of 0 - from there, a higher score means more risk. Note: The RiskGrades you'll see here are snapshots in time that will inevitably change based on day-to-day stock market trading patterns.

A week ago, it looked like the stock markets were headed into a serious correction. Now, after an up-and-down week, uncertainty rules. What a perfect time to consider the risks in your portfolio.

Stocks Versus Bonds

A note on methodology: Exchange-traded funds that track Canadian bond indexes are used here because the indexes themselves are not included in the RiskGrades database.

Bond Index/ETF

Ticker

RiskGrade

iShares DEX Short Term Bond Index Fund

XSB

17

iShares DEX Universe Bond Index Fund

XBB

24

iShares DEX Long Term Bond Index Fund

XLB

33

iShares DEX All Corporate Bond Index Fund

XCB

26

BMO High Yield US Corporate Bond Hedged to CAD Index ETF

ZHY

62

iShares DEX Real Return Bond Index Fund

XRB

35

Notes: Short-term bonds are the safest thing, aside from cash, to have in your portfolio according to this risk survey. You could easily substitute a ladder of GICs with maturities of one through five years. The universe bond index, including corporate as well as government bonds, is a little more risky, but not much. Same for corporate bonds. Where you run into real risk is with high-yield bonds, which are more like stocks in their behaviour than bonds. Real-return bonds offer protection against inflation, but they come across here as being riskier than some other bond options.

Canadian Stock Market Sectors

Sector

RiskGrade

Sector

RiskGrade

Consumer discretionary

65

Industrials

90

Consumer staples

52

Information technology

87

Energy

101

Materials

113

Financials

73

Telecom Services

46

Health care

78

Utilities

70

Notes: The surprise here is how low on the risk scale the telecom sector is. There are only five stocks in this sector and all but one, Manitoba Telecom Services, have done well in the past month of stock market ups and downs. In fact, telecom stocks are the best performing TSX sector this year, ahead of materials and financials. Note that telecom giants BCE and Telus have dividend yields in the area of 5 per cent.

Blue-Chip Canadian Stocks: The S&P/TSX 60

Company

Ticker

RiskGrade

Company

Ticker

RiskGrade

Agnico-Eagle Mines

AEM

161

Inmet Mining

IMN

199

Agrium

AGU

141

Kinross Gold

K

190

Arc Energy Trust

AET.UN

126

Loblaw

L

87

Bank of Montreal

BMO

96

Magna Int.

MG.A

220

Bank of Nova Scotia

BNS

82

Manulife Financial

MFC

112

Barrick Gold

ABX

157

Metro Inc.

MRU.A

96

BCE

BCE

69

National Bank of Cda

NA

90

Biovail

BVF

109

Nexen

NXY

126

Bombardier

BBD.B

190

Penn West Energy

PWT.UN

133

Brookfield Asset Mgt

BAM.A

91

Potash Corp.

POT

145

Cameco

CCO

105

Power Corp.

POW

100

Cdn Ntnl Railway

CNR

115

Research in Motion

RIM

151

Cdn Natural Res.

CNQ

122

Rogers Communctns

RCI.B

96

Cdn Oil Sands Trust

COS.UN

139

Royal Bank of Cda

RY

95

Cdn Pacific Rail

CP

134

Saputo

SAP

80

Canadian Tire

CTC.A

127

Shaw Communctns

SJR.B

72

Cenovus Energy

CVE

163

Shoppers Drug Mart

SC

125

CIBC

CM

91

SNC-Lavalin

SNC

118

Eldorado Gold

ELD

207

Sun Life Financial

SLF

110

Enbridge

ENB

67

Suncor Energy

SU

146

EnCana

ECA

114

Talisman Energy

TLM

137

Enerplus Resources

ERF.UN

106

TD Bank

TD

88

First Quantum Min.

FM

243

Teck Resources

TCK.B

238

Fortis

FTS

119

Telus Corp.

T

80

George Weston

WN

100

Thomson Reuters

TRI

100

Gildan Activewear

GIL

150

Tim Hortons

THI

80

Goldcorp

G

171

TransAlta Corp.

TA

98

Husky Energy

HSE

115

TransCanada Corp.

TRP

82

Iamgold

IMG

234

Yamana Gold

YRI

180

Imperial Oil

IMO

101

Yellow Pages

YLO.UN

144

Notes: Now you see how there's no such thing as a safe stock. We have the 60 largest, most heavily traded Canadian stocks here and the lowest RiskGrade is the 67 scored by the doughnut chain Tim Hortons. Mining stocks -- hello, Teck -- are among the most volatile stocks on this list. The financial stocks listed here come off pretty well, utilities are middling.

Blue-Chip U.S. Stocks: The Dow Jones Industrial Average

Company

Ticker

RiskGrade

Company

Ticker

RiskGrade

Alcoa

AA

190

JP Morgan Chase

JPM

150

American Express

EXP

191

Kraft Foods

KFT

82

Boeing

BA

162

Coca-Cola

KO

85

Bank of America

BAC

195

McDonald's

MCD

85

Caterpillar

CAT

195

3M

MMM

109

Cisco Systems

CSCO

144

Merck

MRK

130

Chevron

CVX

112

Microsoft

MSFT

102

Dupont

DD

152

Pfizer

PFE

105

Walt Disney

DIS

138

Procter & Gamble

PG

78

General Electric

GE

171

AT&T

T

82

Home Depot

HD

124

Travelers

TRV

98

Hewlett-Packard

HPQ

140

United Technologies

UTX

124

IBM

IBM

108

Verizon Comms.

VZ

84

Intel

INTC

149

Wal-Mart

WMT

64

Johnson & Johnson

JNJ

69

Exxon-Mobil

XOM

88

Notes: Introducing the low-risk champ in this survey of stock market risk, Wal-Mart. Makes sense -- Wal-Mart is in the consumer staples sector, and that's a classic refuge in volatile markets. Notice how the Dow is home to more than a few of these lower-risk stocks, including Johnson & Johnson, Procter & Gamble and Kraft.

Source: RiskGrades.com

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