It’s amazing how much the news can affect the stock market. I mean, when it’s about the stock itself, over even a specific industry, sure. But if a stock is strong enough, investors shouldn’t be too scared about their portfolio dipping if it means those stocks will simply rally again in the future. Even if that future is a few years away.
However, this also provides an opportunity for those same investors who, while they wanted these stronger stocks before, couldn’t afford them at the time. Well, the time is now for stocks like Nutrien (TSX:NTR)(NYSE:NTR), SNC-Lavalin Group (TSX:SNC), and Canadian Pacific Railway (TSX:CP)(NYSE:CP).
The world’s largest crop-nutrient company is in the process of an acquisition strategy to grow is retail base with brick-and-mortar stores, of which the company already has about 1,400. The reason behind this is to get more of the market share and be in the position to bargain with suppliers and sell products for more, steady cash flow.
Yet investors are still wary about this stock. Last year it saw its all-time high, reaching $75 per share, before plummeting to $60 per share by the end of the year. Since that time, it’s been slowly and steadily creepy up, currently trading at $72.42 at the time of writing. But analysts believe the stock has further to go, reaching $85 no problem in the next 12 months.
That’s simply because as population growth continues to eat up farmland, Nutrien will already be in the position to offer its products on an international scale, which it already does. The demand for potash, especially around the world in countries like India and China, should see cash flow explode in the next few years.
As I said in the beginning, the news has not been great for companies like SNC-Lavalin, and the stock is a reflection of this. Pretty much since the charges of corruption and bribery were announced, the company has been in free fall, most recently after its earnings report.
That because the global engineering and construction firm announced it would be leaving 15 countries and would be selling a 10.01% stake in the Ontario 407 toll operator for $3.25 billion. This on top of reporting a loss, which sent shares down 6%.
But the company is now in survival mode, with the stock price at $28.21 at the time of writing and big changes promising a brighter future. The new SNC will be a simplified, consolidated operation, which will improve project delivery and create sustainable, renewable growth for more consistent cash flow. This starts with the company reducing its overhead by $250 million annually.
So, while continued bad press could keep this stock down, it’s frankly a steal. The second quarter could be a different story for this company, and analysts believe the stock will reach $40 to even $60 in the next 12 months. That’s doubling your money at this point in time!
After a momentous climb back from its $235 share price at the end of last year, Canadian Pacific seems to have peaked just shy of the $300-per-share mark at the time of writing. Bad weather and oil and gas cuts meant the company wasn’t being used as much as it thought it would, providing even less opportunity for transportation.
But luckily, after years of cuts and reorganization, the company is in a position of considerable strength, acquiring businesses that should further increase its cash flow for years to come. Even with heavy reinvestment, the company’s books remain strong. In fact, while the first quarter may have been less than ideal, its 2018 beat analyst expectations. And it’s not like the company was suffering, as profit still increased 25%.
However, the price it’s at right now might be a bit on the high side given recent news. The second quarter will likely be similar to the first, missing analyst expectations as the oil and gas cuts continue. Analysts believe that while the stock could reach $350 in the next 12 months, it could also drop as low as $200 per share.
That being said, this stock is a winner in the long run. A drop might be in its near future, and when that happens, that would be the perfect time to buy this powerhouse stock.
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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. Nutrien is a recommendation of Stock Advisor Canada.