For bargain hunters looking to pay less for more, the TSX Index’s 52-week-low list is worth checking up on. Buying dips and plunges in names is no guarantee of solid returns moving forward. Many companies are in a rut, and they deserve to be discounted. Others, which may have taken a hit over short-term noise, are worth buying; in time, the fundamentals, not noise, tend to dictate the trajectory of a stock.
Undoubtedly, the battered TSX stocks making the 52-week list are likely to be depressed due to a combination of negative quarters or trends and noise. It’s the noise that tends to cause Mr. Market to misprice a name to the downside. And in the case of the following TSX dogs, I think they’re more than worth picking up if you’ve got the investment dollars to make a contrarian move.
The TSX 52-week-low list is full of bargains
Undoubtedly, everybody forgets the negative headlines when a stock bounces back from a pullback. And in this market, with the Roaring 2020s underway, I think buying the dip is a great strategy.
Badger Infrastructure Solutions
Badger is a non-destructive soil excavator that’s able to bring its services to its clients. Undoubtedly, Badger’s success will be tied to the magnitude of infrastructure spending, making it a top pick for the Roaring 2020s environment.
Shares of the infrastructure play have fallen upon hard times of late, plunging nearly 27% from its 52-week highs. Down over 30% from all-time highs, Badger is a compelling dog that could dig itself out of the hole it dug itself in.
The company recently reported two consecutive quarters of unexpected losses with a side of some very weak EBITDA margins. Shares were punished accordingly, though. The weakness is baked in, the bar is low, and I think many analysts are discounting the improving environment.
With a rock-solid balance sheet and a pathway to expand upon margins, I think it’s a wise idea to nibble on some shares on recent weakness. Despite challenges, I believe the tides will turn so much in Badger’s favour such that it’ll be impossible to ignore the stock.
Next up, we have former high flyer Cargojet, which has recently fallen into a bit of a tailspin. Fresh off a 34% correction, I think the next move for shares of the name is higher, perhaps much higher, as the company looks to capitalize on growth in e-commerce. Undoubtedly, digital sales growth has slowed, with many returning to physical stores. But in due time, I think this post-lockdown “hangover” in e-commerce will end, and Cargojet and the broader basket of e-commerce plays will be back to roaring higher.
Like Badger, Cargojet has clocked in unexpected losses in recent quarters in three of the last four. With an ever-improving industry backdrop on the other side of this pandemic, though, I find it hard to believe that shares will be kept at these lows. At just 4.8 times sales, Cargojet is a bargain, so buy it before it has a chance to ascend.
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.