3 Canadian Stocks to Buy if the Economy Avoids a Recession

If the economy avoids a recession, investors can afford to get a little more optimistic. That doesn’t mean chasing every risky stock with a nice story, but looking at companies tied to consumer spending, travel, industrial demand, and big-ticket purchases that can recover when confidence improves. These stocks often struggle when everyone expects a downturn, but can move quickly when the market starts pricing in better growth, steadier jobs, and lower borrowing stress.

MTY

MTY Food Group (TSX:MTY) is a great example of this. The company owns, franchises, and operates a large portfolio of restaurant brands, including quick-service, casual dining, and takeout concepts across Canada, the United States, and international markets. It’s not a pure recession-proof business, since restaurant spending can soften when consumers feel pinched. However, if the economy avoids a hard landing, MTY could benefit from steadier traffic, better franchise confidence, and stronger demand for convenience. Meanwhile, in the last year the company continued to focus on debt reduction, cash generation, and squeezing more value from its huge brand network.

In fiscal 2025, system sales reached about $5.7 billion, while net income attributable to owners came in at $119 million. Normalized adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $291.9 million, and operating cash flow reached $184.2 million. In the first quarter of 2026, revenue came in around $267.8 million, while earnings per share (EPS) of $0.98 beat expectations. Same-store sales slipped 2.5%, which shows consumers remain careful. Still, with trailing 6 times earnings and a business that throws off cash, MTY could work well if spending stabilizes instead of cracking.

ACQ

AutoCanada (TSX:ACQ) is more cyclical, which is exactly why it could do well if recession fears fade. The company runs franchised auto dealerships across Canada and the United States, selling new and used vehicles while also offering parts, service, finance, insurance, and collision repair. Car sales depend heavily on consumer confidence, credit availability, and interest rates. That hurt the business as buyers grew cautious. Over the last year, AutoCanada closed its remaining RightRide locations, cut costs, managed inventory more tightly, and pushed ahead with restructuring efforts aimed at improving profitability.

Its recent earnings show both the risk and the opportunity. In the third quarter of 2025, revenue from continuing operations fell to $1.2 billion from $1.4 billion a year earlier. Gross profit dropped 22.2% to $187.4 million, and the company posted a net loss of $2.9 million. Yet adjusted EBITDA came in at $58.1 million, and the adjusted EBITDA margin actually improved to 4.8% as costs fell. The stock recently traded around 26 times trailing earnings. So this may not be a sleep-at-night stock. Still, if rates ease, buyers return, and management’s cost cutting sticks, AutoCanada could bounce hard.

BBD

Bombardier (TSX:BBD.B) may be the clearest “economy avoids recession” pick of the three. Bombardier stock builds business jets and has rebuilt itself around its Challenger and Global aircraft families, along with a growing services business. Over the last year, Bombardier stock kept proving its turnaround was not just a nice headline. Demand for private jets remained solid, services revenue grew, and the company’s backlog gave investors more confidence in future sales. The Global 8000 also adds a fresh product catalyst.

The numbers were strong. For 2025, Bombardier stock revenue rose 10% to US$9.6 billion, while free cash flow reached US$1.1 billion. In the first quarter of 2026, revenue rose 5% to US$1.6 billion, services revenue jumped 25% to US$617 million, and adjusted EPS hit US$1.81. Bombardier stock also raised its 2026 free cash flow outlook to more than US$1 billion and reported a backlog of US$20.3 billion. After a huge share-price run, valuation risk is real. Furthermore, a weaker economy could slow jet orders. But if growth holds up, Bombardier stock’s services, backlog, and debt reduction story still look powerful.

Bottom line

MTY, AutoCanada, and Bombardier stock each offer a different way to invest in a better-than-feared economy. And if Canada avoids recession, these stocks could have room to surprise investors who got too gloomy too soon.

The post 3 Canadian Stocks to Buy if the Economy Avoids a Recession appeared first on The Motley Fool Canada.

Should you invest $1,000 in AutoCanada right now?

Before you buy stock in AutoCanada, consider this:

The Motley Fool Canada team has identified what they believe are the top 10 TSX stocks for 2026… and AutoCanada wasn’t one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 … if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have over $18,000!*

Now, it’s worth noting Stock Advisor Canada’s total average return is 94%* – a market-crushing outperformance compared to 85%* for the S&P/TSX Composite Index. Don’t miss out on our top 10 stocks, available when you join our mailing list!

Get the 10 stocks instantly #start_btn6 { background: #0e6d04 none repeat scroll 0 0; color: #fff; font-size: 1.2em; font-family: 'Montserrat', sans-serif; font-weight: 600; height: auto; line-height: 1.2em; margin: 30px 0; max-width: 350px; text-align: center; width: auto; box-shadow: 0 1px 0 rgba(0, 0, 0, 0.5), 0 1px 0 #fff inset, 0 0 2px rgba(0, 0, 0, 0.2); border-radius: 5px; } #start_btn6 a { color: #fff; display: block; padding: 20px; padding-right:1em; padding-left:1em; } #start_btn6 a:hover { background: #FFE300 none repeat scroll 0 0; color: #000; } @media (max-width: 480px) { div#start_btn6 { font-size:1.1em; max-width: 320px;} } margin_bottom_5 { margin-bottom:5px; } margin_top_10 { margin-top:10px; }

* Returns as of April 20th, 2026

More reading

• 2 Canadian Stocks That Could Benefit From a Stronger Loonie
• TSX Today: What to Watch for in Stocks on Friday, May 1
• A Year Later: 3 TSX Stocks That Proved the Doubters Wrong
• Worried About Tariffs? 2 TSX Stocks I’d Buy and Hold
• TSX Today: What to Watch for in Stocks on Wednesday, April 15

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends MTY Food Group. The Motley Fool has a disclosure policy.