There’s no denying the markets are in danger of overheating. Bitcoin is at record levels, as is the Dow Jones, and it’s been hovering around the 30,000 mark for multiple weeks now. And with another earnings season on the way, the market could be on its way to another crash, as investors grow hesitant among these rising valuations.
In 2020, many investors were caught flat-footed with the sudden and rapid decline the markets took in March. This time around, there should be no excuses, as stocks have been soaring amid the pandemic, even as the economy has struggled. The disconnect between what’s going on in the economy versus the stock market should make it clear that it’s only a matter of time before another crash takes place, and it could be within the next few months.
Stocks to keep on your watch list in the case of a crash
If the markets do go over the deep end this year, there are a couple of stocks you’ll want to keep close tabs on, as buying them at a deep discount could make you rich later on.
When Air Canada (TSX:AC) stock plummeted in 2020, it fell below even $10 a share. Entering 2021, its stock price was well over $20 and simply too expensive to buy given the risks and the uncertain future that lies ahead for the airline stock. While investors are dreaming of the days when the stock will be back to its pre-pandemic highs of more than $50 a share, there isn’t a guarantee that will happen, especially if air travel doesn’t fully recover. The best-case scenario is that it’ll likely take multiple years for the stock to get back to where it was before the pandemic hit.
Either way, Air Canada stock isn’t all that attractive of a buy right now, unless you can get it at a dirt-cheap price, and that may not happen unless the markets crash. That doesn’t mean it’ll get to under $10 again, but even at less than $15, it might be worth taking a chance.
Another stock worth watching is BlackBerry (TSX:BB)(NYSE:BB). Despite surging in value last month on news of a deal with Amazon to report on vehicle data in the cloud that could be utilized by car manufacturers, a disappointing earnings result quickly turned investors bearish on the stock yet again.
BlackBerry is a stock that many investors have loved to hate. In three years, it has lost half of its value and last year it hit a low of just $3.94. In a market crash, investors could again be rushing to hit the sell button on BlackBerry, and even if it hits $5 or $6, that could set you up for some great gains later on. Outside the March market crash last year, the tech stock has typically traded above the $6 mark, and so anything below that could be a steal of a deal.
The company has been slow to generate growth but with the acquisition of Cylance strengthening its artificial intelligence capabilities and its partnership with Amazon likely to help improve its top line, it’ll only be a matter of time before BlackBerry’s numbers get stronger and the stock gets out of the gutter. And that’s why if you get a chance to buy it during another market crash, you shouldn’t ignore the opportunity to do so.
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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 owns shares of BlackBerry. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. David Gardner owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends BlackBerry and BlackBerry and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon.