Heading into 2018, many investors did not know what to expect. The Bank of Canada had committed to its rate hike path, mirroring the U.S. Federal Reserve. There was skepticism from some analysts and economists over this path, but strong fundamentals and rising inflation seemed to tie the hands of policymakers.
The last months of 2018 has seen anxiety over rate policy compounded by concerns over slowing growth and trade wars. Global stock markets have suffered convulsions in the fall and the choppy conditions show no sign of letting up in the winter. Oil and gas prices are retreating once again, which means the energy-heavy TSX will likely struggle in the near term.
Instead of lamenting the pullback today, we are going to look at three stocks that are well positioned to bounce back in 2019. Many fundamentally sound equities are trading at a discount right now, so investors should be on the lookout for bargains.
BlackBerry (TSX: BB)(NYSE: BB)
BlackBerry stock fell 3.66% on December 6. Shares were down 18% in 2018 as of Thursday’s close. BlackBerry stock has shown significant volatility in 2018, but the stock has not been technically oversold since late June. As of this writing it posted an RSI of 37. It is trending into oversold territory in early December.
Back in late October I’d discussed why I liked BlackBerry stock heading into November. The company reported double-digit growth in its software and services billings in the second quarter of fiscal 2019. BlackBerry has benefitted from its footprint in automated vehicle software development, and continued development in this area will pay off huge for the company as this industry takes off in the coming decades.
The company recently bolstered its cybersecurity segment with the $1.4 billion purchase of the firm Cylance in November. These segments are capable of driving growth for decades.
Andrew Peller (TSX: ADW.A)
Andrew Peller stock fell 3.34% on December 6. Shares had plunged 23% over a three-month span as of Thursday’s close. The stock reached all-time highs early this year, but it has since suffered a steady decline into 52-week lows.
Andrew Peller has posted strong organic sales growth in recent quarters. Wine consumption is trending up for North American demographics, which bodes well for its long-term growth prospects. As of this writing, the stock boasted an RSI of 24, indicating that Andrew Peller is oversold in early December. The stock also offers a modest quarterly dividend of $0.0513 per share.
WestJet Airlines (TSX:WJA)
WestJet Airlines stock had plunged 22% in 2018 as of close on December 6. It represents the riskiest bet of the three stocks we covered today. In the past the airline industry has been particularly vulnerable during turbulent economic times. If global pressures plunge Canada into recession, airliners like WestJet could slip quickly into crisis.
However, the airline industry will get a boost if the current dip in fuel prices holds and/or worsens into 2019. WestJet will also hope that 2019 is a quiet year on the labour front. A dispute with the pilot union cost the company “tens of millions” in revenue in 2018, according to CEO Ed Sims. If tailwinds like lowering fuel costs break right for WestJet, then 2019 could be a nice bounce-back year. The stock last paid out a quarterly dividend of $0.14, representing a 2.7% yield.
