What COVID Crash? These TSX Stocks Soared 80% This Year

These 2 TSX stocks have stayed notably strong during the COVID-19 market crash. But will these two keep on rallying? What investors should do?

| More on:
Business success with growing, rising charts and businessman in background

Image source: Getty Images

The COVID-19 market crash has not been as bad for some TSX stocks as it was on the broader markets. While some stocks are still trading 30%-40% lower, some have more than doubled so far this year.

Let’s take a look at two such TSX stocks that stood notably strong during the epic selloff in March. But will these two continue rallying? What should investors do?

Top TSX stocks: Kinaxis

Emerging tech company Kinaxis (TSX:KXS) is one of the top gainer TSX stocks this year. It has soared almost 80% so far in 2020.

Kinaxis offers cloud-based software subscription services to improve supply chain planning. RapidResponse—its product with supply chain analytical capabilities — helps manage interconnected, complex inventory management processes.

Kinaxis offers its customers two to five-year subscription models. The high retention rate of its customers enables recurring revenues and visibility. Notably, its average revenue growth came in at around 18% in the last five years. The stock surged by almost 500% in this period.

In the last few months, the global supply chain was badly hit amid the pandemic and lockdowns. However, as businesses restructure their supply chains and operations, Kinaxis will likely see increased demand.

The stock has soared this year mainly due to its above-average revenue growth and high margins. Kinaxis stock is currently trading close to its 52-week high and looks overvalued. Conservative investors could wait for a pullback to enter.

Franco-Nevada

Franco-Nevada (TSX:FNV)(NYSE:FNV) is another stock that stood relatively strong in the COVID-19 market crash and recovered faster. The stock has soared more than 70% so far this year.

A $40 billion Franco-Nevada is a gold-focused royalty and a streaming company that differentiates itself from the traditional mining companies. Unlike its peers, however, it does not operate but owns working interests in mines, thus saving on capital expenditure significantly and helping realize higher profit margins.

Franco-Nevada generates almost two-thirds of its business from gold. The yellow metal’s rally has notably uplifted its earnings in the last few quarters. In the recently reported quarter, its net income increased by 67% compared to the same quarter last year.

Many gold miners and streamers have reported superior earnings growth in the first quarter due to higher realized gold prices.

Broad market uncertainty might continue to push gold prices higher for the rest of 2020. Also, lower interest rates and more economies plunging into recession will likely bode well for the traditional safe haven. Thus, gold miners and streamers could continue to benefit from the broader trend, pushing these TSX stocks even higher.

However, investors should note that many such gold-related stocks are already trading at a significant premium. The stocks could march higher, but their movement from here might not be as steep as it was this year.

Kinaxis offers strong growth potential, while Franco-Nevada’s safe business model makes it stand out from traditional miners.

Notably, both these TSX stocks seem overvalued at the moment and pose a high risk-high reward scenario for investors.

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. The Motley Fool recommends KINAXIS INC.

More on Tech Stocks

Businessman holding AI cloud
Tech Stocks

Could Investing $20,000 in Nvidia Make You a Millionaire?

Nvidia stock has made investors millionaires in the last 10 years. Is it too late to invest to become a…

Read more »

Business man on stock market financial trade indicator background.
Tech Stocks

1 Growth Stock Down 50 Percent to Buy Right Now

There are plenty of growth stocks in the market worth considering, but Shopify (TSX:SHOP) looks like one of the best…

Read more »

Woman has an idea
Tech Stocks

Prediction: 1 Stock That Could Trounce the Market 

The TSX has been favouring tech stocks, but not this one. However, it has the potential to trounce the market…

Read more »

clock time
Tech Stocks

Long-Term Investing: 3 Top Canadian Stocks You Can Buy for Under $20 a Share

These three under-$20 stocks offer excellent buying opportunities for long-term investors.

Read more »

Businessman holding AI cloud
Tech Stocks

AI Will Transform Everything: Investors, Be Early Adopters and Buy These 3 Stocks

Investors looking to invest in companies doing big things in AI should consider these three stocks for their portfolios.

Read more »

stock research, analyze data
Tech Stocks

Forget Shopify: These Unstoppable Stocks Are Better Buys Today 

Should you consider buying Shopify stock while rivals consider a buyout or should you go for stocks with a stronger…

Read more »

A colourful firework display
Tech Stocks

2 Potentially Explosive Stocks to Buy in March

These two growth stocks are destined for many more years of market-crushing returns.

Read more »

edit CRA taxes
Tech Stocks

TFSA Millionaires Are Learning They Can Still Be Taxed

If you day trade stocks like Shopify (TSX:SHOP) in a TFSA, you may be taxed.

Read more »