3 Stocks to Buy During the Market Rally

The stock market rally has benefitted many companies. If you want to profit, pay close attention to stocks like BlackBerry Ltd. (TSX:BB)(NYSE:BB).

| More on:
Index funds

Image source: Getty Images

While the market rally has been sending stock prices higher, not all companies have benefited equally. Some businesses are now terribly overvalued, while others still have plenty of upside to go.

If you want to profit from the recent market rally, here are your best bets.

Bet on the economy

goeasy Ltd (TSX:GSY) is a hidden gem. Few investors have heard of this stock. But if you want massive gains, this stock is for you.

In 2012, goeasy stock traded at $7. In February, they topped $70, but following the coronavirus pandemic, the stock now changes hands at just $40 apiece. And that’s after the market rally occurred. This is a rare chance to buy into a rapid-growth stock.

goeasy is essentially a small-denomination lender specializing in loans ranging between $500 and $35,000. With more than 100 locations throughout Canada, plus an online portal, any Canadian can get approved for a small loan within minutes.

For years, this segment of the market was ignored by traditional banks. Existing competitors were known for their terrible customer service. goeasy turned the model upside-down, focusing on meeting their borrowers’ needs and driving repeat sales and referrals. More than 95% of customers come away satisfied.

Market volatility should increase demand for goeasy’s services, while the recent market rally will improve its customers’ ability to pay back those loans. With a $560 million market cap, expect some choppiness, but this business should be valued above $1 billion once conditions normalize.

The long-term market rally

BlackBerry Ltd. (TSX:BB)(NYSE:BB) isn’t the company it used to be. In 2010, it was one of the largest smartphone manufacturers in the world, controlling a 20% market share. Today, it doesn’t produce a single phone. Instead, the business builds next-generation software focused on cyber security needs.

Consider the company’s QNX platform, which secures vehicles from hacking. The more technology we put into our cars, the more vulnerable they become. Self-driving cars will be cool, but only if they’re safe. BlackBerry’s QNX system is already installed in 150 million vehicles worldwide.

Another example is BlackBerry’s Cylance division. Using artificial intelligence, this software can detect threats before they occur. This segment alone should likely warrant a multi-billion price tag, yet BlackBerry as a whole is valued at only $3.3 billion.

The market rally has pushed the stock price up a bit, but for patient investors, the biggest rewards are still ahead.

Go big with China

Canada Goose Holdings Inc (TSX:GOOS)(NYSE:GOOS) stock has benefited from the recent market rally, but like BlackBerry, it’s playing the long game.

Once one of the hottest retails stocks in the world, Canada Goose stock is now two-thirds off its highs. The reason is simple: slower growth, particularly in Asia.

Canada Goose is famous for its $1,000 jackets. Yet despite its high-end reputation, the company barely has a presence in China, the largest luxury market in the world. Last year, the company began its expansion efforts, growing international sales by 61% in 2019 alone.

The coronavirus pandemic has dramatically slowed these expansion efforts. Long term, however, they will continue as planned.

Buy-and-hold investors can capitalize on short-term delays by purchasing shares now. Despite the market rally, shares still trade at an 80% discount to their former valuation multiples.

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 and recommends Canada Goose Holdings. The Motley Fool recommends BlackBerry and BlackBerry. Fool contributor Ryan Vanzo has no position in any stocks mentioned.

More on Tech Stocks

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 »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Tech Stocks

1 IoT Solutions Provider Could Outperform BlackBerry (TSX:BB)

Technology stocks underperform in 2022, although one IoT solutions provider is a screaming buy compared to a former smartphone maker.

Read more »

Growing plant shoots on coins
Tech Stocks

2 Growth Stocks Available at Discounts: Should You Buy?

Canadian growth stocks in the tech sector are trading at considerable discounts from their pre-pandemic valuations, and these two might…

Read more »

TSX Today
Tech Stocks

TSX Today: What to Watch for in Stocks on Tuesday, May 24

Top bank earnings could keep the banking sector volatile on the TSX this week.

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Tech Stocks

Is Now the Time to Buy Shopify (TSX:SHOP) and 1 More Beaten-Down Stock?

These tech companies have strong fundamentals and are well positioned to benefit from ongoing digital shift.

Read more »