Building a $20,000 Portfolio That Can Endure Market Cycles

Investing in the equity markets is a strategy that should help you generate inflation-beating returns over time. However, it is essential to identify a portfolio of fundamentally strong stocks that have the potential to perform well across market cycles.

So, let’s see how Canadian investors can build a $20,000 portfolio that could endure market cycles. In this article, I have identified three recession-resistant TSX stocks you can add to your watchlist right now.

Is this TSX stock a good buy?

Valued at a market cap of almost $50 billion, Waste Connections (TSX:WCN) provides comprehensive waste management services across the United States and Canada. It offers waste collection, transfer, disposal, and recycling for residential, commercial, and industrial customers.

The company operates landfills, transfer stations, and intermodal facilities while offering specialized services for oil and gas exploration waste, contaminated soil treatment, and resource recovery through extensive recycling programs.

Waste Connections reported exceptional first-quarter (Q1) results with revenue of $2.23 billion, up 7.5% year over year, driven by robust pricing execution and continued acquisition activity. It achieved a record 32% adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margin during its seasonally weakest quarter, demonstrating operational resilience despite challenging weather impacts across multiple markets.

Core pricing reached 6.9%, exceeding expectations and supporting the company’s full-year guidance of at least 6% price growth. Its 2.8% decline in volumes was attributed to weather-related disruptions and the purposeful shedding of low-quality contracts from previous acquisitions.

Management emphasized that underlying business trends remained healthy, with sequential improvements in pricing and volumes when normalized for weather impacts.

WCN’s operational excellence continues advancing, with voluntary employee turnover falling below 12% for the 10th consecutive quarter and safety incidents reaching historic lows.

Acquisition activity remains robust, with $125 million in annualized revenue already closed, positioning Waste Connections for another strong M&A (mergers and acquisitions) year while maintaining financial flexibility at 2.3 times debt-to-EBITDA leverage.

A blue-chip TSX dividend stock to own right now

Valued at $90 billion by market cap, Canadian National Railway (TSX:CNR) is engaged in the rail, intermodal, trucking, and related transportation businesses in Canada and the U.S.

In Q1, Canadian National achieved its second-best safety performance in history while maintaining solid operational metrics. Car velocity averaged 209 miles per day despite wildfire disruptions and labour challenges.

CEO Tracy Robinson emphasized CN’s “make the plan, run the plan, sell the plan” approach to scheduled railroading, which delivered industry-leading customer satisfaction scores.

The company’s tri-coastal network, connecting Canada’s Pacific and Atlantic coasts to the U.S. Gulf Coast, provides unique competitive advantages, with over half of the projected 2025 volume growth expected to come from CN-specific opportunities rather than broader economic cycles.

Financially, CN maintained its 29-year dividend growth streak with a 5% increase in 2025 while generating nearly $3.1 billion in free cash flow. It also returned $23 billion to shareholders over a five-year period through dividends and buybacks.

CN remains focused on efficiency, reliability, and asset velocity as it navigates tariff uncertainties and geopolitical complexities through close customer collaboration and operational flexibility.

A recession-resistant TSX stock

The final recession-resistant TSX stock on the list is GFL Environmental (TSX:GFL). The company reported exceptional Q1 results that exceeded guidance across all key metrics, with revenue growth of 12.5% and record adjusted EBITDA margins of 27.3%.

GFL achieved its highest first-quarter margin in history, demonstrating strong operational execution despite weather-related headwinds that impacted roll-off and special waste volumes.

CEO Patrick Dovigi highlighted robust pricing performance at 5.7%, surpassing expectations and providing confidence in full-year targets. Following the successful $6 billion divestiture of its Environmental Services business in March, GFL deployed proceeds to repay over $3.5 billion in debt and repurchased $2.5 billion in shares, achieving its lowest-ever net leverage ratio of 3.1 times.

This enhanced financial flexibility positions the company for accelerated merger and acquisition activity, with $240 million already deployed year-to-date across three transactions that are generating over $85 million in annualized revenue.

Management expressed confidence in exceeding the high end of their $700-900 million M&A deployment target while maintaining disciplined capital allocation focused on maximizing return on invested capital through tuck-in acquisitions and continued share buybacks.

The post Building a $20,000 Portfolio That Can Endure Market Cycles appeared first on The Motley Fool Canada.

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More reading

• Creating a $35,000 Portfolio That Can Withstand Market Volatility
• Capitalize on the Comeback: Top 2 TSX Stocks to Buy Now
• The Best Way to Invest $50,000 in Today’s Canadian Market
• New to Investing? Top Canadian Stocks to Buy With $500 as the TSX Hits Record High
• 2 Top TSX Dividend Stocks for Contrarian Investors

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy.

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