Once again it's ugly out there today. The Dow Jones Industrial Average dropped below 11,000 for the first time in two years, plunging over 2%. The rest of the U.S. stocks are not far behind with both the Nasdaq composite and the S&P 500 down over 2% as well. It's depressing. But you don't have to look far to see a nicer picture, you just have to look up: up north that is.The Toronto Stock Exchange has fared much better in what has officially become a U.S. bear market. Over the past year, while the S&P 500 sank over 19%, the S&P/TSX Composite index dropped only 3.4%. Year-to-date, while the S&P 500 declined over 16%, the TSX was barely down 1%. And if you stay away from financials on the TSX, you'd fare even better.
How so, you ask, doesn't the Canadian economy closely follows the U.S.'s? It's mostly true as the U.S. is Canada's biggest trading partner and the Canadian economy is intertwined with that of the U.S. For example, some of the layoffs at GM and Ford plants have occurred in Ontario plants, and Canada's unemployment rate edged up to 6.2% in June due to a drop in full-time jobs.
The thing is, though, that the TSX is heavily weighted in mining and oil & gas companies, sectors that have fared better than techs and financials the past year or so. Getting exposure to the Canadian market is very easy since many stocks also trade on U.S. exchanges, the famous of all may be Research in Motion (NASDAQ: RIMM). But there are others, and some of them, the U.S. investor may want to consider.
I'll start with the usual suspects of gold companies. From Barrick Gold (NYSE: ABX), the world's largest bullion miner, to Goldcorp (NYSE: GG), the second-biggest producer of the metal by market value, to Yamana Gold (NYSE: AUY), these companies have provided some good defensive plays as investors run for cover from surging inflation into gold. Today all three are up 5%, 5.2% and 5.3% respectively. A lesser known name deserving attention is Toronto-based Agnico-Eagle Mines Ltd. (NYSE: AEM), which has already increased its market cap by nearly 39% year-to-date. The company has good assets in Quebec, Nunavut and Mexico, is well-managed and would be a good long-term holding.
Then there are some solid oil & gas plays: While down about 1% today, EnCana (NYSE: ECA) has already surged over 21% year-to-date. Other than having large natural gas reserves and interests in oil sands, Enbridge (NYSE: ENB) doesn't have the stellar performance of EnCana, up only 3.3% year-to-date, but its main business of natural gas and natural gas transportation, as well as pipelines, this stock should provide at the very least stability if not appreciation in the future. Pipeline construction projects for crude oil and natural gas continue to be a growth business for Enbridge despite the recent delay in its plans for a major pipeline to transport Canadian crude to the U.S. Gulf Coast.
After that, we have one of Jim Cramer's favorite sectors, agriculture. With developing countries increasing food consumption and changing dietary habits, the fertilizer market should be robust for some time into the future as supply is not seen meeting demand for years to come. The major plays in the sector include Agrium Inc. (NYSE: AGU) and Potash Corp. of Saskatchewan (NYSE: POT). While both stocks are off over a percent today, year-to-date they have gained over 38% and 51% respectively.
Then we have Warren Buffett's recent entrance into railways. If you would like to follow the Oracle of Omaha, Canada offers two options in the form of Canadian National Railway (NYSE: CNI) and Canadian Pacific Railway (NYSE: CP). Neither has done much year-to-date, but at least they didn't sink either.
Last, but one that just stuck to my mind with all the talk of Iran and its uranium enrichment program is Cameco Corp. (NYSE: CCJ). Again, the company has not moved much year-to-date, and it's got problems from leaks into Lake Ontario and its gold-mining unit, but if you believe nuclear energy is safe and a good alternative to fossil fuel, then perhaps this uranium producer is your play.
Either way, in this volatile, crazy bear market, the Canadian alternatives can provide stability and defensive plays. On occasion, they can even provide with nice returns.
Why is gold making a new high, trading at $1,118.00 per ounce?
Chasing Value: Ten stocks for 2010 -- Part 1 
Closing Bell: A six-day rally (AIG, REGN, M, MOT, PALM, RIMM)
