Warning! 2 Stocks That Could Make or Break Your Portfolio

Stocks like Bombardier, Inc. (TSX:BBD.B) and Linamar Corporation (TSX:LNR) have been pummeled as economic anxiety weights on investors.

| More on:
Red siren flashing

Image source: Getty Images.

Investors had ample warning about the state of the economy as we entered 2019. North American stock markets had violent convulsions in the final months of 2018. The sell-offs were reversed in January after the U.S. Federal Reserve and Bank of Canada indicated that there will be a dovish turn this year. However, the reality of slower growth for both economies is a lingering concern.

In January, I’d discussed the shaky performance of stocks in industries like aerospace, transportation, and rail. A Statistics Canada report for November 2018 revealed that the manufacturing sector posted a 0.5% decline in activity year over year. Transportation and warehousing also dropped 0.5%.

Today, we are going to look at three stocks that have been punished over the past year. Should investors pounce on potential discounts or expect more volatility?

Bombardier (TSX:BBD.B)

Bombardier stock has plunged 22.2% over the past three months as of close on February 8. Shares are down 34% year over year. Bombardier stock has been punished over the past year, but the company has also managed to overcome some troubling obstacles.

The company saw earnings rise 48% year over year in Q3 2018. Bombardier upped its guidance for 2019 and projected improved cash generation. However, the company took heat after announcing it would slash 5,000 jobs as part of its ongoing restructuring. It is expected to release its fourth-quarter and full-year results for 2018 this week.

Bombardier stock fell into oversold territory rapidly following its Q3 release. It recovered quickly and has been on a flat pace since late 2018. Still, I like Bombardier at its current price ahead of its Q4 release.

Linamar (TSX:LNR)

Linamar stock fell 7.57% on February 8. Shares have climbed 6.2% in 2019 so far, but the stock is down 28.2% year over year. Sales at Linamar and automotive parts manufacturer giant Magna International were very good in 2018, but trade tensions put downward pressure on equities in the auto sector. The USMCA has yet to be ratified, which has not worked to alleviate anxieties after an agreement was reached in late 2018.

For the first nine months of 2018, Linamar saw sales increase to $5.88 billion compared to $4.97 billion in the prior year. The company reported adjusted net earnings of $470 million, or $7.09 per share, compared to $414 million, or $6.27 per share, in the previous year. The board of directors also declared a dividend of $0.12 per share, which represents a modest 1% yield.

Linamar looked overpriced above the $50 mark in early February, especially ahead of its fourth-quarter earnings release. However, after its dip late last week, the stock may be a sneaky pickup at $48.13. It has an RSI of 45, which puts it in neutral territory price wise right now.

Bombardier and Linamar are risky pickups as risks build in the broader economy. However, both stocks also come at a nice price as the TSX veers into overbought territory.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. Magna is a recommendation of Stock Advisor Canada.

More on Investing

thinking
Dividend Stocks

Should You Buy BCE Stock for its 8.6% Dividend Yield?

Down over 20% from all-time highs, BCE stock offers you a tasty dividend yield in 2024. But is the TSX…

Read more »

grow dividends
Tech Stocks

Why Nuvei Stock Jumped 26% on Monday

Nuvei (TSX:NVEI) stock saw shares surge today as the company confirmed it's in talks to go private through a buyout.

Read more »

consider the options
Investing

Better Buy for the Dividend: Enbridge or Nutrien?

Enbridge (TSX:ENB) and Nutrien (TSX:ENB) are great dividend plays for new investors going into April.

Read more »

Gold bars
Stocks for Beginners

TSX Materials in March 2024: The Best Stock to Buy Right Now

Materials have been quite volatile, though the price of gold has surged to all-time highs. That makes this stock a…

Read more »

grow dividends
Dividend Stocks

How Long Would It Take to Turn $20,000 Into $100,000 With TSX Dividend Stocks?

Here's how high-quality TSX dividend stocks and the power of compound interest can help grow your investments by 400% or…

Read more »

Happy diverse people together in the park
Tech Stocks

A Once-in-a-Generation Investment Opportunity: Artificial Intelligence (AI) Growth Stocks

Canadian tech companies like Kinaxis (TSX:KXS) are doing big things in AI.

Read more »

Paper airplanes flying on blue sky with form of growing graph
Dividend Stocks

2 Soaring Stocks I’d Buy Now With No Hesitation

These two stocks may be the most expensive on the market, but they're high for a reason! And I'm still…

Read more »

Arrowings ascending on a chalkboard
Investing

This Canadian Blue Chip Is Trouncing TSX Returns, and It Still Has Room to Run

Alimentation Couche-Tard (TSX:ATD) stock looks quite frothy heading into earnings, but there may still be upside.

Read more »