Market Rally or Crash? 3 Canadian Giants Rose up to 40% Last Week

Is market readying for a crash, or the rally is in the offing? Some Canadian giants have almost doubled since their recent lows last month.

| More on:
edit Person using calculator next to charts and graphs

Image source: Getty Images.

Markets continued to rally last week, despite growing tensions on the pandemic front. The TSX Composite Index rose almost 2% last week. But notably, this Canadian broad market index has soared almost 30% from its recent lows last month. While stocks have risen on the hopes of the U.S.’s plans of opening its economy, quarterly earnings will largely shape TSX stocks in the short term.

Interestingly, there were some Canadian bigwigs that substantially outperformed market rally recently. For instance, top tech giant Shopify (TSX:SHOP)(NYSE:SHOP) surged almost 40% last week. Among other top gainers, cannabis giant Aphria (TSX:APHA)(NYSE:APHA) rose 16%, while leading gold producer Barrick Gold (TSX:ABX)(NYSE:GOLD) soared 10% last week.

Stocks that are beating the market rally: Shopify

Shopify stock has defied any pressures from coronavirus jitters or lockdowns recently. It has soared in nine of the last 10 trading days. The top e-commerce retailer Shopify has soared almost 70% in April so far, making it the third-biggest company in Canada by market cap.

As of writing, Shopify is valued close to $97 billion, behind only Royal Bank of Canada and Toronto-Dominion Bank.

While businesses are struggling to stay operative amid the lockdowns, many are opting to go online, thus reaching Shopify. The company’s CTO Jean-Michel Lemieux tweeted last week, “our platform is now handling Black Friday level traffic every day! It won’t be long before traffic has doubled or more.”

It is notable that while almost all corporations are trimming their outlook for the rest of 2020, Shopify could stand tall and even report record top-line growth in the coming quarters.

Aggressive investors could enter in Shopify for further upside given its expected strong revenue growth. However, investors should note that the stock looks extremely expensive after its recent market rally.

Aphria

Aphria, a top pot stock of Canada, was one of the top gainers, surging more than 15% last week. It has soared more than 85% since its 52-week low of $2.65 a month ago.

Aphria reported yet another strong quarter that mainly drove the stock last week. While many cannabis stocks are struggling with revenue headwinds and difficulties raising new capital, Aphria looks substantially better placed on these fronts.

Its net revenues rose almost 100% in Q3, making its ninth consecutive quarter of close to 100% or higher revenue growth. Aphria reported earnings of $5.7 million in the recently reported quarter.

Despite its recent rally, Aphria stock is trading almost 50% lower to its 52-week high of $10.7. Unlike peers, its growth prospects look fairly good mainly due to its strong balance sheet and a distribution network in entire Canada.

Aphria is looking to expand internationally, particularly in Germany, which could notably accelerate its earnings growth in the medium to long term.

Barrick Gold

One of the largest gold producers, Barrick Gold stock surged approximately 10% last week. The yellow metal has been on a remarkable upward climb this year amid broad market uncertainties.

Rallying gold prices bode well for gold miner stocks, as higher realized gold prices improve their profit margins. At the same time, rallying gold prices push gold miner stocks up as well.

Barrick Gold stock has been trading substantially strong so far this year. It has surged almost 60% since its recent lows last month, beating market rally by a wide margin. Its improving debt profile and strong dividend growth have put it well ahead of peers in the industry.

Many market pundits are expecting recession this year, which could bode well for a traditional safe haven — gold. Barrick Gold will likely be one of the undisputed winners if gold prices continue to rally.

However, conservative investors should look to buy the dips, as the stock looks to be trading at a high premium after the market rally.

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. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify and Shopify.

More on Tech Stocks

edit U-turn
Tech Stocks

The 2 Tech Stocks to Buy Before a 2023 Recovery

Beaten-down tech stocks such as Docebo and Lightspeed Commerce are well poised to deliver outsized gains to investors in 2023.

Read more »

Profit dial turned up to maximum
Tech Stocks

2 Cheap Stocks That Could Make You Rich in 2023

Even with a hot start to the year, there’s still plenty of value on the TSX. Here are two top…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

2 E-Commerce Stocks That Could Boost Your Wealth in 2023

E-commerce stocks like Shopify (TSX:SHOP) could increase your wealth in 2023.

Read more »

Hourglass projecting a dollar sign as shadow
Tech Stocks

The Best Time to Buy These Tech Stocks Is Right Now

While high-potential tech stocks trade well below their fair value, these are some of the best investments you can buy…

Read more »

Lady holding mobile phone and shopping bags
Tech Stocks

Better e-Commerce Buy – Shopify vs Alibaba

Shopify and Alibaba are both important e-commerce companies. But which is the better stock?

Read more »

Technology, internet and networking, security concept
Tech Stocks

Here’s the Next TSX Stock I’m Going to Buy

Not all tech stocks are performing poorly. In fact, this TSX stock continues to rise higher after more strong earnings!

Read more »

healthcare pharma
Tech Stocks

Is Well Health Stock a Buy in February 2023?

WELL Health (TSX:WELL) stock is up 26% in the last month alone, but with full-year earnings still expected, that could…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Is Shopify Stock a Buy Before Its Q4 2022 Earnings?

SHOP stock has soared a handsome 50% so far in 2023, notably beating its peers.

Read more »