This 1 TSX Stock Beat Dogecoin Last Week on Solid Earnings

Let’s find out why this Canadian stock is beating the Dogecoin lately and why it’s a much better long-term investment than any cryptocurrency right now.

| More on:
Man holding magnifying glass over a document

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

On Friday, the shares of Montreal-based SNC-Lavalin Group (TSX:SNC) rallied by 16% against a 1.2% rise in the TSX Composite Index. With this, its stock beat one of the hottest cryptocurrencies, Dogecoin, last week. While the meme-based cryptocurrency has seen a massive rally in the last couple of months, it lost nearly 10% of its value last week.

SNC-Lavalin stock is beating Dogecoin

By comparison, SNC-Lavalin stock ended the week with solid 14.4% gains. Tesla CEO Elon Musk’s announcement about the company suspending the use of Bitcoin as a form of payment to purchase its cars took a big toll on the crypto investors’ sentiments. While the crypto market remains extremely volatile these days, I find the shares of fundamentally strong companies like SNC-Lavalin much better investment option for small retail investors. Before we discuss more on that, let’s find out why SNC-Lavalin stock staged a massive rally last week.

SNC-Lavalin’s solid Q1 results

On May 14, SNC-Lavalin reported its solid Q1 results, as its actual adjusted earnings per share stood at $0.48. It was nearly 37% higher than analysts’ consensus estimates and showcased a massive improvement over its adjusted net loss of two cents per share in the same quarter of 2020.

While its adjusted revenue in the first quarter fell by 18% YoY (year over year) to $1.8 billion, it improved by 7% sequentially. It was also higher than analysts’ estimates of $1.7 billion. To add optimism, SNC-Lavalin’s adjusted EBITDA margin rose to 9.1% in the last quarter compared to just 3.9% a year ago.

Its SNCL engineering services segment revenue fell by 1.3% YoY. But it was still within its guidance range, as the COVID-19 didn’t have any major impact on its operations in the last quarter.

Is its stock better than Dogecoin?

SNC-Lavalin primarily provides engineering and construction solutions to a wide range of industries. As the energy demand — including the demand for oil, gas, and power generation — goes up in the coming quarters, I expect its stock to outperform the broader market.

SNC-Lavalin stock is currently trading at $32.54 per share with 48% year-to-date gains after losing 27% in 2020. Despite its strong recovery this year, its stock still looks undervalued, given its impressive future growth prospects.

I understand we shouldn’t ideally compare an industrial stock like SNC-Lavalin with a meme-based cryptocurrency like Dogecoin. However, I can’t resist doing that right now, as cryptocurrencies have become one of the hottest investment topics this year. A tweet from big celebrities like Elon Musk may trigger a sudden rally in Dogecoin prices. In contrast, even a single critical tweet by him about the cryptocurrency is enough to cause a massive selloff in it. That’s one of the reasons why Bitcoin — the oldest cryptocurrency — lost more than 20% of its value last week.

Such extremely high volatility is enough to wipe out years of savings within a few days. That’s why investors with low- to medium-risk appetite should consider investing in fundamentally strong companies like SNC-Lavalin for the long term rather than risking their money in the crypto market.

Foolish takeaway

Currently, 11 out of a total of 13 Bay Street analysts covering SNC-Lavalin recommend a buy with a consensus price target of $36.65 per share. I find this price target to be very conservative and expect the stock to inch up much beyond this target in the coming quarters.

Overall, investing in stocks like SNC-Lavalin could yield handsome returns in the long term — without worrying about huge risks that come with cryptocurrency trading.

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 Jitendra Parashar has no position in any of the stocks mentioned.

More on Tech Stocks

clock time
Tech Stocks

Now’s the Time to Load Up the TFSA With These 2 Top TSX Stocks

Here are two top TSX stocks that long-term growth investors may not want to give up on, especially at these…

Read more »

shopping online, e-commerce
Tech Stocks

Shopify (TSX:SHOP) Stock Recovers 30% From its 3-Year Lows: Should You Buy?

Shopify stock: Should you buy the dip or wait for more weakness?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Tech Stocks

What Market Correction? 2 High-Growth Tech Stocks That Are on the Rise

I don’t think it will be long before these two Canadian tech stocks are back to delivering market-crushing returns.

Read more »

grow dividends
Tech Stocks

Why Kinaxis (TSX:KXS) Stock Jumped 14% Last Week

Kinaxis Inc. (TSX:KXS) stock popped over the past week after adding yet another big company to its impressive stable.

Read more »

potted green plant grows up in arrow shape
Tech Stocks

TFSA Investors: Double Your Investments With These 3 Top Growth Stocks

Despite the volatility, I am bullish on these three stocks, given their solid growth potential.

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 »

Dividend Stocks

TFSA Investors: Turn $1,000 Into $10,000 in 10 Years

10-fold growth within a decade is rare but not unheard of. You can capture this growth either by predicting a…

Read more »

Growth from coins
Tech Stocks

Got $1,000? Buy These 3 Under-$20 Growth Stocks to Earn Higher Returns

These under-$20 growth stocks can deliver solid returns in the long run.

Read more »