It’s only a matter of time before we see another crash in the markets. There’s simply been too much bullishness out there amid mounting job losses and a pandemic that’s just not going away anytime soon. Reality will hit sooner or later.
My guess is that it will happen when companies report their second-quarter earnings reports in a few months and investors see just how bad they’ve been doing during the pandemic.
When another crash happens, investors should look at possibly buying the two stocks listed below:
Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is an excellent option to buy if the market crashes, as you can lock-in an astronomical dividend. The top bank stock’s currently paying investors a quarterly dividend of $0.79.
At a price of $60 per share that translates into an annual yield of 5.3%. It’s a better yield than before the pandemic, when shares of TD were around $75.
However, another crash in the markets could send the stock back near its 52-week low of $49. At that price, the stock’s dividend yield would be an incredible 6.4%. That would be too good to pass up given that over the long term, the bank will recover from any setback due to COVID-19 and it’ll likely increase its dividend payments.
If there’s a prolonged downturn in the economy, the bank may stop hiking its payouts, but it’s less likely that it will reduce its existing dividend. That’s why if shares of TD fall, investors shouldn’t hesitate because the opportunity to get such a lucrative yield could be rare.
Lightspeed POS Inc (TSX:LSPD) is a top tech stock on the TSX that’s produced some strong results even amid the pandemic. It’s not often you can find stocks that grow at a rate of 50%, let alone the 70% that Lightspeed grew at in its most recent quarterly results.
The only reason investors should be hesitant about the stock today is its valuation. At a price-to-sales multiple of about 18 and trading at seven times its book value, Lightspeed just isn’t a cheap buy.
The stock’s rallied more than 20% in the past three months and it got a boost from its earnings report. However, that can change quickly if the economy’s struggles prove to be long term and if many businesses close up shop.
While that may adversely impact Lightspeed’s business, the key is that it’s proven that its software is a winner with clients. And as the economy recovers, it’ll see strong demand.
Getting Lightspeed at a cheap price can secure some strong returns for investors later on. While I wouldn’t expect the stock to hit its 52-week low of $10.50 again, even if it drops below $20, it could be too good to pass up.
Apart from March’s market crash and the recovery that followed, it’s been rare for Lightspeed’s stock to find itself below $20 over the past two years. A recovery back up to $30 would already generate a return of 50%.
This is a hot, growing stock that investors should keep on their radars. If the opportunity arises to buy Lightspeed at a big discount, investors shouldn’t ignore it.
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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 David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of Lightspeed POS Inc.