Stock bear markets are unsettling for many investors, who see their unrealized gains evaporate and possibly replaced by big red numbers.
However, a bear market also provides us with the best buying opportunities, particularly in stocks that have previously been too expensive.
Get ready to buy super growth stocks such as Canadian Apartment Properties REIT (TSX:CAR.UN) and Cargojet (TSX:CJT) on the cheap, but be patient with your entry points.
A bear market must-buy stock: CAPREIT
In this market crash, it’s unbelievable how resilient CAPREIT stock has been. The growth stock was above its 50-day simple moving average at the market close on Thursday, and its stock price action remains in a growth trend.
Hardly any capital has rotated out of the growth stock so far. CAPREIT stock has only declined 13% from its high versus the market’s 29%.
The residential REIT is a top defensive name. It manages about 65,000 rental apartment and townhouse suites and manufactured home community sites in major urban geographies across Canada, the Netherlands, and Ireland.
The internalized management team made a timely decision on equity offerings in 2019 that raised gross proceeds of $1.12 billion to finance acquisitions, fund intensification opportunities, and repay debt.
At writing, CAR.UN stock trades at $52.21 per share and offers a yield of 2.6%. At about 22.8 times its forward price to funds from operations, the growth stock isn’t cheap and its yield not enticing. So, be patient with the entrance of new money.
A further correction of 15% to $45 per share would be a good place to give CAPREIT another look.
A market crash must-buy stock: Cargojet
On New Year’s Day, I wrote that a 2020 market crash would be your chance to make millions with Cargojet. However, you’ve got to buy it at the right time.
Many people will say you can’t time the market. But the fact is everyone is timing the market in one way or another.
For example, value investors aim to buy stocks at prices that are substantially below what they’re worth. Dividend investors have the objective of buying safe dividend stocks at yields that are satisfactory to them.
Now is not yet the time to buy Cargojet, but we’re getting closer to that point. CJT stock just fell 31% from its peak, breaking its 50-day simple moving average in the process. The growth stock broke its uptrend.
Cargojet has a monopoly in providing time-sensitive air cargo services in Canada. It represents more than 90% of the domestic overnight air cargo lift available in the country.
As global economic demand for goods is expected to slow down or even go negative, it can fall much further. In the last market crash in which a recession was present, the stock fell more than 80% from peak to trough. Wait for the stock to trade sideways for a few months before buying. Better be safe than sorry!
The Foolish bottom line
A stock bear market is the best time to buy quality stocks like Canadian Apartment Properties REIT and Cargojet, which are normally too expensive, for super gains. However, a market crash can last for four to six months.
Therefore, it’d be in your best interest to accumulate cash for the next few months or until the market starts going sideways before buying these excellent stocks.
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Fool contributor Kay Ng has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CARGOJET INC.