Many investors fear market crashes. I don’t blame them. The 2008/2009 recession that led to the market crashing 50% from peak to trough left a mark on those who were invested in stocks at the time. Unfortunately, too many people lost tonnes of their life savings, and to this day, some still stay on the sidelines.
However, market crashes are really a rare opportunity for those who seize it. If a 2020 market crash were to be bestowed upon us, embrace it, as it’d be your chance to make millions!
Though anyone can pose as an investing whiz by randomly picking stocks during a market crash and coming out with substantial gains, I believe hand-picking specific stocks like Cargojet (TSX:CJT) is the way to vast wealth.
Arriving at $1,000,000 in a single trade
A $10,000 investment in Cargojet stock since mid-2007 (before the last market crash) would be worth nearly $86,300 today — an eight-bagger equating to total returns of 18.7% per year. These are already beating the long-term average market returns of roughly 10% per year.
Yet Cargojet stock was nearly a 43-bagger from the bottom of the last market crash in 2008, growing a $10,000 investment to $429,680 for annualized returns of 40%! Investing merely $23,500 would have transformed to more than $1,000,000.
Cargojet is a super growth stock. However, it’s highly sensitive to the global economy. When the bear attacked about 11 years ago, the stock fell more than 80% from peak to trough! This allowed subsequent astronomical gains in the following decade.
Cargojet has pretty much a monopoly in providing time-sensitive air cargo services in Canada. Specifically, it represents more than 90% of the domestic overnight air cargo lift available in the country.
The growth stock has benefited from the rise of e-commerce. It keeps busy by operating more than 60 flight legs every business night using its fleet of aircraft.
About 75% of its domestic revenues are under long-term contracts with variable surcharges for changing costs like fuel. Additionally, all contracts have guaranteed volume minimums and annual inflation adjustments on price increases.
A dividend bonus
From 2016 to 2019, Cargojet increased its dividend by 48%, or 10.2% per year on average. However, the stock only yields 0.9% currently. So, treat the dividend as a bonus and have your eyes set on price appreciation.
Are you looking to make good money from stocks during the next market crash, or are you planning to get rich? If you plan to make millions, you’d better start accumulating cash and have a list of super growth stocks handy so that you buy with hand over fist in cash when the bear attacks.
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 Kay Ng has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CARGOJET INC.