There seems to be no respite coming soon for global financial markets. The coronavirus outbreak has been bad for the markets in general, but especially harsh to some sectors and stocks. Let’s have a look at three Canadian stocks that have taken a huge hit amid overall market weakness in the last two weeks.
Spin Master (TSX:TOY) stock has lost almost 45% in the last two weeks. The large part of its loss came yesterday after it released poor fourth-quarter results. The consumer discretionary company reported a loss in the fiscal year 2019, and also issued a gloomy outlook for 2020.
In January, management had warned about downbeat earnings guidance for the current year. However, the stock took a deep hit due to poor earnings, along with an already negative sentiment driven by the coronavirus scare. The company has an evident weakness in terms of the outbreak, as a large portion of its goods is made in China.
Even if Spin Master stock is trading at its all-time low levels, it could continue to trade weakly in the short to medium term. It could take a while before China restarts operating at its full capacity, and overall market sentiment improves.
It should be noted that Vermilion is one of the top-yielding stocks in Canada. With its steep fall, the stock’s dividend yield has peaked beyond 20% recently. However, it would be prudent not to be lured by such a high yield in uncertain times.
The dividend yield is measured as the annual per-share dividend divided by the price of the stock. Thus, notably, it is not the dividends, but the stock’s fall that has made the yield look higher.
Energy markets have long been treading through muddy waters, and coronavirus has further dampened the sentiment.
Vermilion Energy’s fourth-quarter earnings will likely pave the path for its stock in the short term. However, the overall outlook looks grim for the energy sector and allied industries.
Energy company Paramount Resources (TSX:POU) stock is another laggard. It has lost more than 40% in the last two weeks. Broad market volatility, along with uncertain oil and gas prices weighed on Paramount stock recently.
In 2019, Paramount Resources reported 10% lower revenues than in 2018, although its loss narrowed. Analysts’ earnings estimates for 2020 don’t look too encouraging as well.
Volatile energy commodity prices have hammered the sector badly in the last few years. The nastiness can be seen in Paramount’s steep stock fall. It was trading close to $25 levels in September 2017, and it fell to $3 levels yesterday.
As I mentioned with regard to Vermilion, the outlook for energy markets continues to look gloomy. Even after such a sharp drop in the share price, the worrisome sentiment could keep energy investors at bay. In my view, even if you are an aggressive stock picker, it would be prudent to wait till these muddy waters clear.
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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 Vineet Kulkarni has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Spin Master.