It looks like 2021 may become the year of the short squeeze. It started out with GameStop stock back in January, when the company had a rise and fall of epic proportions. Then it was BlackBerry stock not once, but twice — first back in January and then again over the last few weeks. Other companies have been victims to the short squeeze. And what did they have in common? Reddit.
Yes, the social news aggregate seems to be paving the way for the next stock set to soar. It has many investors scouring the investment pages, looking to see which company will be recommended next. And it’s clear to see why.
In the case of GameStop stock, shares of the company exploded 1,745% within the first month of January. However, those same shares then collapsed by a whopping 88% within the next month. Shares are now up 1,589% year to date.
As for BlackBerry stock, it was not as high but no less dramatic. Shares rose 273% in the first month then fell 53% in January. But in the last month, shares are up 93% and climbing, again: thanks to Reddit.
Here are the Motley Fool, we don’t recommend this strategy, even if it’s proving to be fruitful for some investors. While some people will know when to get in and when to get out, most won’t. And that leaves more people losing money than gaining it. A short squeeze means it’s a very short period of time you’ll be able to take advantage of this trend. Instead, we recommend the safer strategy of long-term investing to build real, sustainable wealth.
Consider a hyper-growth stock instead
So, you’re watching GameStop stock and BlackBerry stock and thinking, “Should I get in now? How about now? Oh no, I missed out!” All that time, you’ve missed out on returns from proven winning stocks — stocks that continue to see enormous gains. That’s where Motley Fool puts its focus.
What are these magical stocks? They’re not that magical at all. What investors should start digging into isn’t necessarily Reddit (though it can be a good resource). Instead, dig into industries and the best stocks within those industries — industries that are set up for massive growth in the next few years and decades. One of those stocks I would choose based on that information is NorthWest Healthcare Properties REIT (TSX:NWH.UN).
5 TSX Stocks Under $5Click here to learn more!
Buy a Canadian stock with strong multiples
In this last year, the healthcare industry was put through the ringer. However, it also received a massive amount of investment from government and private agencies alike. The world learned that we were sorely unprepared for such a devastating pandemic. Pandemics happen, and the world needs to be ready.
If there is one industry set to soar in the decades to come, it will be healthcare. While there are several ways you could invest in this industry, real estate is a strong option. From office buildings to hospitals, each has its own important role in the healthcare sector. So, investing in a diverse real estate company that covers all these areas is far better than crossing your fingers over Reddit finds.
As the world recovers and governments have more cash to spend, the healthcare industry will likely be the first to see that income. Beyond governments, we are entering a renewed Roaring ’20s, where consumers want to spend. A large trend towards supporting community institutions such as hospitals continues to be a way consumers wish to spend their money. So, further investment is likely through this avenue as well.
Meanwhile, I believe NorthWest will continue to skyrocket beyond the pandemic. Shares are up 24% in the last year alone and 113% since the crash in March 2020, climbing past all-time highs. But the stock remains of strong value, offering a 1.4 times book value and an incredibly cheap 9.7 price-to-earnings ratio!
I’ll be honest; NorthWest isn’t going to see another year of over 100% growth — not in the next year, at least. But this is a cheap stock that investors can get behind for future growth, receiving a strong dividend yield of 6.14% in the process. On top of that, it’s a Motley Fool recommendation rather than a Reddit find.
If you're looking for opportunities in this volatile market, I'd encourage you to consider the following stocks:
We are giving away a FREE copy of our "5 Small-Cap Canadian Growth Stocks Under $5" report. These are 5 Canadian stocks that we think are screaming buys today.
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 recommends BlackBerry and NORTHWEST HEALTHCARE PPTYS REIT UNITS. Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned.