Just when you thought the meme stock era was over, AMC Entertainment stock more than doubled in a single day before pulling back, finishing the day up around 95%.
Trading halts brought forth at AMC stock put in place to combat the unprecedented surge could fuel even more buying in ensuing trading sessions, given the comradery of the folks at Reddit’s WallStreetBets forum and their anger directed towards the big money on Wall Street.
Sure, the Gamestop trading halts worked at stopping the January 2021 rally in its tracks, but will they be enough to stop the June 2021 meme stock resurgence? Nobody knows.
The AMC stock trade heats up: Don’t stand in the way!
In any case, investors would be wise not to bet against any of the WallStreetBets names, unless they’re willing to take a massive hit to the chin. After the tremendous disappointment following the previous Robinhood-induced bust, I think it would be a mistake to underestimate the firepower of the folks at Reddit, as they look to shrug off any trading restrictions, freezes, and all the sort.
While it may be tempting to go with the crowd as the meme stock trade heats up again, I’d argue that it’s far better to enjoy the show safely and comfortably from the sidelines. Many terrific stocks don’t require you to risk your shirt over the near term. In this piece, we’ll have a look at two TSX bets that are capable of market-beating gains going into 2021’s end.
You don’t need to risk your entire invested principal on a shot at gains. However, if you’re willing to delay your gratification, I think that most Canadians will do far better in hard-hit names like Kinaxis (TSX:KXS) or Cargojet (TSX:CJT).
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Kinaxis is a cloud-based Software-as-a-Service (SaaS) company that’s pretty misunderstood. For those unfamiliar with the company, it’s a software developer behind supply-chain management and operation planning solutions.
The stock has been under pressure over the past few months, shedding over 37% of its value since its high in October 2020. Mr. Market punished growthier securities in anticipation of higher inflation and interest rates, and Kinaxis was not spared. As the coronavirus is conquered, Kinaxis also faces another overhang on its stock. The pandemic rendered many supply chains a mess, sparking impressive growth for Kinaxis’s platform and scenario simulations. As pandemic tailwinds fade, investors may be bracing themselves for tough year-over-year comparisons.
Just because the pandemic is winding down doesn’t mean supply chains won’t remain under pressure, though. And as demand continues overwhelming supply in the post-pandemic world, I expect Kinaxis to continue winning over new customers with its incredibly innovative platform.
Scheduled cargo airline Cargojet (TSX:CJT) is a wonderful company that also got a boost from pandemic lockdowns. However, if you view 2020 not as a temporary boost and more of a sustained acceleration in the adoption of e-commerce, then Cargojet is a must-buy on the dip.
The stock is fresh off a 30% pullback and is ripe for buying if you’re willing to hold through what could be a modest deceleration in growth. People will start ordering online again in due time, and when they do, the demand for overnight shipping will re-accelerate again.
Despite its small size ($3 billion market cap), Cargojet actually has an extensive moat, with its airline fleet and its brilliant managers who know how to make the best use of them.
Kinaxis and Cargojet are under pressure, and I think a margin of safety is forming. In time, both firms will shrug off the more challenging environments, making them top buys on weakness, even as “sexier” plays like AMC stock beckon your investment dollars with explosive upside action.
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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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CARGOJET INC. The Motley Fool recommends KINAXIS INC.