Hi again, Fools. I’m back to highlight three stocks that fell sharply last week. As a reminder, I do this because the biggest market gains are made by buying quality companies
- during times of extreme market turbulence;
- when their long-term potential is being ignored; or
- when they’re available at well below intrinsic value.
The S&P/TSX Composite Index sank another 4.5% last week, so there should be no shortage of attractive value plays to pounce on.
Let’s get to it.
Kicking things off is Shopify (TSX:SHOP)(NYSE:SHOP), which dropped 11% last week. Shares of the cloud-based ecommerce technologist are now off 23% versus a loss of 17% for the S&P/TSX Capped Information Technology Index.
Triggering the recent downturn was a dilutive secondary offering by the company. Specifically, it’s an offering of 2.6 million Class A subordinate voting shares at $154 per share.
On the bright side, Shopify’s operations remain strong. In Q3, EPS topped expectations by $0.07 as revenue soared 57.5% to $270.1 million.
“Solid execution and continued rapid growth drove our strong results in the third quarter,” said CFO Amy Shapero. “We’re well positioned to close 2018 and enter 2019 with excellent momentum.”
With the stock now off nearly 30% from its 52-week highs, it might be an opportune time to bet on that momentum.
Next up, we have Premium Brands Holdings (TSX:PBH), whose shares sank 7% last week. The food distributor is now off 37% over the past year versus a flat return for the S&P/TSX Capped Consumer Staples Index.
Trade uncertainty has weighed heavily on the stock in 2018, but there’s reason to be optimistic about the new year. In the most recent quarter, adjusted EPS climbed 22% as revenue spiked 50% to a record $835.5 million.
“I can say with full confidence that our long term prospects have never been better,” said President and CEO George Paleologou. “In fact, we now have more major new growth initiatives in our pipeline than we have ever had in our history.”
At a solid dividend yield of 2.6%, that long-term potential seems too tasty to pass up.
Rounding out our list is Canada Goose Holdings (TSX:GOOS)(NYSE:GOOS), which plunged a whopping 18% last week. Shares of the winter jacket specialist are still up 50% over the past year versus a loss of 21% for the S&P/TSX Capped Consumer Discretionary Index.
The brand has become the target of a boycott in China, ignited by Canada’s arrest of Huawei Technologies CFO Meng Wanzhou. China represents about 30% of the world’s luxury market and is a significant part of Canada Goose’s long-term growth plans, so it’s no surprise that Mr. Market is concerned.
That said, Canada Goose’s financials and growth rates remain rock solid. With the stock now off 40% from its 52-week highs and trading at a forward P/E in the low 30s, it’s tough not to see this China trouble as anything else but an attractive long-term buying opportunity.
The bottom line
There it is, Fools: three recently battered stocks worth looking into.
They aren’t formal recommendations, of course. Instead, view them as a starting point for further research. Sinking stocks can keep sliding for a prolonged period of time, so plenty of homework is required.
Iain Butler and his team of analysts are giving away one of their top TSX stock picks for 2019 for FREE – for a limited time.
They’ve already helped Stock Advisor Canada members outperform the market by 8X in 2018, but now they’re laser-focused on helping investors in 2019 and beyond.
Brian Pacampara owns no position in any of the companies mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of Shopify and Shopify. Shopify is a recommendation of Stock Advisor Canada.