2 Beaten-Down Canadian Growth Stocks Down Over 66%

Score Media and Gaming (TSX:SCR)(NASDAQ:SCR) stock and this other TSX growth stock are crashing, but should you buy the dip?

| More on:
consider the options

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

The recent growth-driven sell-off has been absolutely vicious and unforgiving to beginner investors chasing returns. Indeed, the tables have turned in a big way, with the biggest winners of 2020 now seen as some of the biggest losers in the first five months of 2021.

Whether or not the pain continues is anybody’s guess. Regardless, I do think that inflation jitters and the threat of higher rates could propel some of the more speculative, unprofitable so-called story stocks much farther into the abyss. So, if you’re going to attempt to catch the fastest-falling stocks in this market, you’d better be ready for pain because odds are, you won’t catch the bottom and will have to deal with continued pressure to the downside as margin calls come flowing in for the many beginner traders.

In this piece, we’ll have a look at two of the most beaten-down Canadian growth stocks that have shed over 66% of their value this year. We’ll have a brief glimpse at each name to see which, if either, is worth taking a chance on amid its profound negative momentum.

Consider Facedrive (TSXV:FD) and Score Media and Gaming (TSX:SCR)(NASDAQ:SCR), or theScore for sort, two major multi-baggers that are now surrendering a huge chunk of their gains. Each tech stock is down a staggering 74% and 66% at the time of writing.

Facedrive

Facedrive was a pretty hyped-up stock last year, as it climbed from $2 and change in early 2020 to just north of $54 in early 2021, before plunging to $14 and change, where shares currently sit today. Some Fool contributor touted the white-hot momentum stock as the next Tesla. I referred to Facedrive as more of a smaller electrified version of Uber or Lyft. I saw no reasons to own the stock as it climbed from the depths of the TSX Venture Exchange.

I just did not get the Facedrive growth story. And I was perplexed as to why investors were piling in at the rate they were, given the lack of durable competitive advantages versus the competition. In numerous prior pieces, I urged investors to steer clear of the name, as the risks of a steep drop were ridiculously high.

Fast-forward to today, and Facedrive stock has been cut in half twice. Despite the drastic pullback, I still don’t see value in the name and wouldn’t look to buy at any price.

Score Media and Gaming

Score is another stock that suffered a massive fall from grace. Although the stock’s negative momentum is accelerating, I wouldn’t be against nibbling into a small position, as the longer-term opportunity in the budding sports betting market, I think, is worth a gamble.

Fellow Fool contributor Ambrose O’ Callaghan recently named Score Media as their top pick for May 2021, citing Bill C-218 (aka the Safe and Regulated Sports Betting Act), which recently passed, as a major catalyst for the stock that many investors may be overlooking amid the broader souring of high-growth names.

I think O’ Callaghan is right on the money. Score stock is oversold here, and it’s one of the more attractive speculative plays for investors who are hungry for the mother of all bounces. Score stock could easily score a front-row seat to a market worth north of US$5 billion.

Better buy?

Both Score and Facedrive stocks are still quite pricey, with both names trading at north of 50 times sales. That said, I do think Score can grow into its multiple over the next few years.

As for Facedrive, I’d continue to steer clear.

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.

Joey Frenette doesn't own any stocks mentioned. The Fool owns shares of Tesla.  

More on Investing

Coworkers standing near a wall
Bank Stocks

Policy Rate: 2 More Hikes After July 2022 to Reach Neutral Level

The Bank of Canada might need three more rate hikes beginning in July 2022 to reach neutral levels.

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

3 Undervalued Dividend Stocks to Buy Right Now

Dividend-paying stocks such as Bank of Montreal offers investors the opportunity to generate outsized gains in the next year.

Read more »

edit Sale sign, value, discount
Investing

Cheap Stocks to Buy: 2 Unbelievable Deals in This Environment

While there are plenty of cheap stocks to buy in this environment, these two undoubtedly offer some of the best…

Read more »

Arrow descending on a graph
Tech Stocks

2 Industries That Saw the Worst Decline Last Month

The TSX has been declining at a sharp angle since the beginning of June. And two industries (crypto and cannabis)…

Read more »

Businessperson's Hand Putting Coin In Piggybank
Dividend Stocks

RRSP Dividend Investors: 2 Top Oversold TSX Stocks to Buy for Total Returns

RRSP investors can pick up top TSX dividend stocks at cheap prices today and get a shot at some attractive…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

1 Canadian Growth Stock That Could Double Your Money in an Economic Recovery

The market downturn is an opportunity to lock growth during the economic recovery. This stock is a blend of value,…

Read more »

Bank sign on traditional europe building facade
Investing

RRSP Investors: Here’s the Best Canadian Bank Stock for Your Buck

Bank of Montreal (TSX:BMO)(NYSE:BMO) stock is getting far too cheap to ignore after the latest spill in the big Canadian…

Read more »

analyze data
Dividend Stocks

2 Safe Dividend Stocks That Could Help You Fight Inflation

A dependable stream of passive income is one way to help offset rising inflation rates. Here are two top dividend…

Read more »