This incredible stock market selloff we’ve seen in March has created a very unique situation that we haven’t seen in more than 11 years. Stocks are now on sale. Many of the companies which saw their stock prices rise rapidly over this past bull market have also seen their stock prices decline in similar fashion of late.
In this article, I’m going to discuss three high beta options for investors looking for a big pop from an eventual rebound.
Finding a Canadian company that is more closely correlated to the health of North American (and Global) e-commerce than Shopify Inc. (TSX:SHOP)(NYSE:SHOP) is difficult to do.
In a sense, Shopify represents a very broad bet on continued growth in the e-commerce channel. Therefore, this recent selloff has sparked worries that a potential recession could be right around the corner. Today, investors who bid shares of Shopify up to record highs just a couple of months ago are spooked.
If you believe that the long-term secular e-commerce tried has only just begun, it may be time to top up your position in stocks like Shopify. After all, this recent selloff has baked more than enough risk into the stock price of Shopify. That said, more potential downside could exist should this pandemic last longer than expected.
Tourmaline Oil (TSX:TOU) is a Canadian mid-sized producer of natural gas and condensate. This is one of those volatile stocks with the ability to swing wildly in each directly. Most of the recent price action for this stock has obviously been on the downside.
Bears on Tourmaline will note that the company is a relatively small player in the oil patch. Therefore, they argue, Tourmaline is unlikely to receive any “too big to fail” considerations from the government.
Tourmaline is highly levered to higher oil prices. Thus, one must indeed wonder about the safety of the company’s juicy dividend yield and the long-term impact of the short-term measures the company will undoubtedly need to employ to stay alive.
On the other hand, bulls will note that Tourmaline’s core assets and operational metrics are fantastic. Should commodity prices rebound, Tourmaline may make it out of this mess better than its peers as supply is knocked out of the market, mainly due to the company’s asset quality.
One of the largest North American players in the uranium mining space, Cameco Corp. (TSX:CCO)(NYSE:CCJ) has seen month-over-month declines of nearly 25% at the time of writing, as the broad selloff in commodities continues on.
Uranium prices have continued to be problematic for investors. Some investors are hopeful about uranium prices for 2 main reasons. First, long-term demand growth out of Japan was expected.
Second, there was a potential for increased U.S. demand for nuclear energy via the Trump administration. However, these hopes now seem likely to fall flat.
Governments are shifting their focus from growth and economic initiatives to the public health concerns posed by coronavirus.
Stay Foolish, my friends.
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.
Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify and Shopify.
Fool contributor Chris MacDonald does not have ownership of any stocks mentioned in this article.