Buying Opportunity: 3 TSX Stocks Are Down Over 50%

Stocks such as Lightspeed and CI Financial have lost considerable market value in the market sell-off and are trading at attractive valuations.

| More on:
Dice engraved with the words buy and sell

Image source: Getty Images.

Canada’s equity market continues to trade in the red. In the first quarter of 2020, the iShares S&P/TSX 60 Index ETF, the most liquid fund in the country, fell close to 20% and is currently trading 25% below record highs.

Several stocks have moved lower, and today we look at three TSX stocks that have lost over 50% in market cap, making them attractive to the contrarian investor.

A mid-cap investment company

Shares of CI Financial (TSX:CIX) are currently trading at $12.46, which is 51% below its 52-week high of $25.81. This company offers global asset management and wealth management services. As investors are spooked over the impact of the COVID-19 on the global economy and equity markets, they have withdrawn funds at a rapid pace.

CI Financial’s asset under management (AUM) fell by 3.4% in the month of February to $176.9 billion, falling close to 12% to $155.9 billion in the month of March 2020. The market uncertainty has resulted in higher redemptions, which is likely to impact the company’s top line in the near-term.

The equity markets are expected to be volatile in the upcoming months, which means most investors will be wary of investing in these turbulent times. Several investors are also abandoning high-cost mutual funds — a key revenue generator for the company.

However, the downturn provides CI with an opportunity to acquire smaller wealth management firms at attractive prices. Further, the pullback has increased the company’s forward yield to 5.8%, which is attractive to the income investor.

A box-office bet

Movie theatres are one of the worst-hit businesses amid the COVID-19 pandemic. People are advised to stay at home and avoid large public gatherings, driving shares of Cineplex (TSX:CGX) lower by 66% in less than two months.

Last month, Cineplex announced the temporary closure of its network of movie theatres, which includes entertainment avenues such as the Rec Room and Playdium. The closure of business operations has, as expected, driven the stock to multi-year lows, completely decimating investor wealth.

Several senior executives have agreed to take pay cuts and the company also announced the layoffs of temporary workers.

In late 2019, shares of Cineplex surged on the news that it would be acquired by Cineworld for $2.1 billion. The acquisition deal will be put on hold at least in the near future given the circumstances.

Cineplex stock might gain steam and surge ahead once lockdown restrictions are removed. There could also be a temporary rise in customer footfalls as people would want to socialize after a lengthy period of self-quarantine.

A high growth company

Shares of Lightspeed POS (TSX:LSPD) are trading at $14.25, which is 70% below record highs. LSPD will roar back to recovery once the lockdown restrictions are relaxed globally.

The company provides point-of-sale services to several small and medium enterprises in North America and Europe, two of the worst affected regions in the world.

The Canada-based company is a leading provider of software, solutions and support systems to several restaurants and retailers. It aims to empower these businesses by helping them increase customer engagement, improve operations and generate growth.

While the COVID-19 will have a huge compact on company revenue in the next two quarters, long-term growth investors should consider investing in LSPD.

In its most recent quarter, it increased sales by a stellar 61% year-over-year. The stock is currently trading below its IPO price and will be one of the top-performing companies when the market rebounds.

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.

The Motley Fool owns shares of Lightspeed POS Inc. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

More on Tech Stocks

Shopping and e-commerce
Tech Stocks

Shopify Stock: What Investors Should Do if it Falls to $300

Shopify (TSX:SHOP)(NYSE:SHOP) stock fell another 10% on Tuesday, as it nears the $300 range. So, what happens if that comes…

Read more »

consider the options
Tech Stocks

Will Enthusiast Gaming Stock Change Course After the Activist Attack?

Last week's cheer in Enthusiast Gaming stock is reversing this week.

Read more »

sale discount best price
Tech Stocks

Tech Selloff: 3 Bargains to Pick Up Now

Thanks to the current slump, you can buy many tech stocks at a discount price or valuation that's usually quite…

Read more »

TSX Today
Tech Stocks

TSX Today: What to Watch for in Stocks on Wednesday, May 25

Apart from bank earnings, TSX investors may want to keep an eye on the FOMC meeting minutes today.

Read more »

Wireless technology
Tech Stocks

3 Tech Stocks Worth Buying Today

Looking for tech stocks to add to your portfolio? Here are three top picks!

Read more »

Question marks in a pile
Tech Stocks

Should Canadians Be Worried About the Snapchat Stock Plunge?

Social media stocks lost US$180 billion in value on Tuesday, as shares of Snapchat (NYSE:SNAP) stock dropped by 41%, below…

Read more »

thinking
Tech Stocks

Is Lightspeed (TSX:LSPD) Still a Buy After its Huge Q4 Loss?

The e-commerce investments in Canada have taken a turn for the worst, which is either a signal to stay away…

Read more »

Hand holding smart phone with online shop concept on screen
Tech Stocks

Forget Bitcoin: Shopify Is a Growth Stock That Could Correct Upwards

Shopify (TSX:SHOP)(NYSE:SHOP) stock looks to have a better risk/reward scenario than the likes of Bitcoin or any other cryptocurrency in…

Read more »