3 TSX Stocks to Buy on a Red Day

A red day is simply a day when stocks fall and screens turn ugly. That can feel uncomfortable, but it can also be the moment patient investors get their best shot at strong companies for a better price. The trick is not to buy just because something dropped. It’s to buy businesses that still look solid when the mood turns sour.

DOL

Dollarama (TSX:DOL) is the kind of stock that often looks even better when consumers feel stretched. It runs one of Canada’s best-known discount chains, so when households start trading down, it usually ends up in the right place at the right time. Over the last year, it also gave investors a new angle by buying Australia’s Reject Shop, which opens up a fresh growth market beyond Canada.

The latest earnings were strong. Fiscal 2026 sales rose 13.1% to $7.26 billion, earnings before interest, taxes, depreciation, and amortization (EBITDA) climbed 13.5% to $2.41 billion, and diluted earnings per share increased 13.7% to $4.73. Comparable sales in Canada still rose 4.2%, which is impressive for a mature retailer.

Dollarama stock is not cheap, with trailing price-to-earnings (P/E) sits around 36 at writing. The company expects 2027 comparable sales growth of 3% to 4%, even as competition stays lively and gross margin took a small hit from Australia. For investors who want a defensive grower, that setup still looks attractive.

SLF

Sun Life (TSX:SLF) is a large insurer and asset manager, so it has exposure to insurance, wealth, and health benefits rather than one single engine. Over the last year, its U.S., Canada, and Asia operations all helped drive growth.

Its latest results looked healthy. Fourth-quarter underlying net income rose to $1.094 billion, while full-year underlying net income reached $4.201 billion. Underlying earnings per share (EPS) came in at $1.96 for the quarter and $7.45 for the full year, with underlying return on equity (ROE) at 18.2% for 2025. Those sturdy numbers suggest Sun Life stock is still growing.

Valuation is where Sun Life stock gets even more interesting. The stock trades at roughly 14 times trailing earnings and about 11 times forward earnings, which looks much more reasonable than many defensive names on the TSX. That gives investors a nice mix of quality and value. The risk is that wealth and asset-management flows can wobble if markets stay rough, but for long-term buyers, a red day could be a smart time to step in.

SU

Suncor (TSX:SU) is the most cyclical stock on this list, but that does not make it a bad red-day buy. Suncor stock is an integrated energy giant, with oil sands production, refining, and retail operations that give it more balance than a pure upstream producer. It also entered 2026 with plans for higher output and stronger buybacks.

The business delivered big numbers in 2025. It generated $12.8 billion in adjusted funds from operations, $6.9 billion in free funds flow, and returned about $5.8 billion to shareholders through dividends and buybacks. It also posted record upstream production of 860,000 barrels per day for the year. In the fourth quarter, upstream production rose to 909,000 barrels per day and adjusted funds from operations hit $3.218 billion. That is a lot of firepower.

Suncor also looks cheaper than many investors expect. Its trailing P/E sits around 18.7, and the stock offers a trailing dividend yield of roughly 2.7%. That is not the fattest yield on the market, but the combination of buybacks, balance-sheet improvement, and production growth gives it real appeal. The obvious risk is oil prices. If crude weakens, sentiment can turn quickly. But on a red day, that volatility can create exactly the kind of opening long-term investors want.

Bottom line

Red days are never fun, but they can be useful. Dollarama stock offers resilience, Sun Life stock offers balance, and Suncor stock offers cash flow with upside. None are perfect, and each has its own risk. But when the market hands out a discount on strong businesses, that is usually a moment worth paying attention to.

The post 3 TSX Stocks to Buy on a Red Day appeared first on The Motley Fool Canada.

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More reading

• 5 Canadian Stocks I’d Feel Good About Holding for the Next 10 Years
• Enbridge vs. Suncor: The Dividend Pick I’d Own Through 2026
• 2 Canadian Growth Stocks That Could Make a Big Move in the Next 12 Months
• 4 TSX Stocks to Buy When Investors Flee Risk
• How Your TFSA Could Help You Earn $2,400 a Year in Tax-Free Passive Income

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Dollarama. The Motley Fool has a disclosure policy.