They can, the main difference being they ride lower (like a sedan) and tend to have less headroom in the cargo area so might not be quite as good at transporting "stuff."

I had a Ford Focus wagon for quite some time, loved it. Cheap to buy, cheap to own, nothing exciting but very dependable and useful. With a small 4-cylinder engine it could not tow (at least not much) and rust eventually claimed it. Still ran like new with over 200K miles.