It doesn’t take much to build a small fortune. In fact, all of the stock picks below have already proven an ability to compound shareholder capital at ridiculous rates. In some cases, investors made 50 times their original investment.
The coronavirus pandemic continues to create countless buying opportunities. The proven stocks on this list now trade at bargain prices, even though they could easily triple in price.
Of course, each company has its own particular risk profile. Find the fit that’s right for you.
Bet on a rebound
The COVID-19 crisis has been painful, but if you think a vaccine is on the way, the most obvious choice is to invest in Air Canada (TSX:AC).
Air Canada has a decade-long record of success. In 2012, shares were priced at $1. By the end of 2019, they were above $50. Betting capital on this management team has led to riches for many.
In normal conditions, AC stock would be a perfect bet. It controls half of the domestic market, and is ruthless at keeping costs under control. Unfortunately, conditions are far from normal.
But here’s the thing: the downturn is already forcing the competition to downsize. With billions in the bank, Air Canada should out-survive its peers, taking market share once markets normalize.
You need a conviction that a vaccine will come quickly in order to send air traffic higher, but this stock would more than triple if it reverted to its pre-pandemic highs.
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This story is different
Long known for its smartphones, the company didn’t produce a single phone last year. All of its revenue now comes from cybersecurity software.
BlackBerry isn’t a lightweight in this industry. Its Cylance division, for example, uses artificial intelligence to thwart attacks before they happen. Meanwhile, its QNX anti-hacking platform is already installed in nearly 200 million vehicles worldwide.
Most people don’t understand that BlackBerry has completely transformed its business. That’s partially why shares trade at three times sales, even though its peer group trades between 10 and 30 times sales.
Once the market understands the new story, expect the gap in valuation to narrow quickly.
My top growth stock
Canada Goose (TSX:GOOS)(NYSE:GOOS) was one of my favourite growth stocks prior to the coronavirus crash. At one point, shares traded as high as 150 times earnings. That’s a princely sum for a retail stock.
As with most retail companies, Canada Goose has been hit hard. Notably, it’s still profitable. This quarter, the company shocked the market by posting EPS of $0.02. Analysts were expecting a loss.
So the company won’t have any problem outlasting the crisis. And what lies on the other side? A return to growth.
Before the pandemic, Canada Goose was growing international sales at 60% per year. North American sales growth was between 20% and 30% annually. If the company can reestablish that level of growth, it’ll make the current 30 times earnings multiple look silly.
You need patience for this one, but it’s the best risk-reward option on this list.
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.