The number of uncertainties seems to be growing by the day, with concerns growing about sluggish economic growth amid high inflation. Stagflation is scary, as too are rising interest rates, the debt ceiling, the Evergrande contagion, and let’s not forget that we’re still in the midst of a pandemic. Indeed, there’s potential for things to go wrong. And we could be in for one incredibly volatile end of the year — one which may not see Santa Claus come to town for that anticipated year-end bounce, the so-called Santa Claus rally.
It’s a scary time, but that doesn’t mean you should make big moves, especially if your portfolio was already on the right track going into the September bout of volatility. Things can certainly go wrong with COVID (more variants after Delta?), the U.S. Federal Reserve’s monetary policies, and many other things that may not yet be on our radars. But let’s not forget that things can still go right, too — or, at the very least, not as bad as expected. And for that reason, a surprise upside move may be in the cards over the next 18 months if the bleak outlook isn’t nearly as grim as it seems today.
Don’t get too bearish on this market
Yes, a bear-case scenario — stagflation with a worsening pandemic — could still happen. That said, tempered inflation, solid earnings growth into year-end, and the last of the worst of this pandemic are also still possible. As others become increasingly pessimistic in this “half-correction” pullback, I think it makes sense to be a buyer on the way down, especially if you have too much cash on the sidelines.
Now, I have no idea what to expect into year-end. Nobody does. But smart investors do know that markets tend to go up over the long run. The longer-term the time horizon, the lower the risks are for investors. Take your emotions out of the equation, and you can do better than the market indices. Find a way to go against the grain with a confident and contrarian mindset, and you could surprise yourself.
The tough the investment landscape, the more willing you should be to deploy any dry powder on names you’ve been watching on your shopping list. In this piece, we’ll look at two names on my shopping list that are in the top 10.
Consider Cargojet (TSX:CJT), one of the best investments I wouldn’t think twice about buying on further weakness.
Cargojet: A stealthy e-commerce play on the TSX
The e-commerce momentum stalled out this year, with behemoths like Amazon.com running out of steam and flatlining, despite relatively decent results. Cargojet, a firm that serves the Canadian overnight shipping market, hasn’t been spared. Its shares have been slogging through the year, down around 7% year to date. Indeed, CJT stock’s momentum enjoyed last year couldn’t be sustained forever. As shares look to regain their footing, though, I think investors would be wise to punch their ticket into the name. The long-term e-commerce tailwind hasn’t gone anywhere, and it’s likely to pick up again, as many digital shoppers head back to their favourite websites rather than physical stores.
At just shy of 100 times trailing earnings, Cargojet is by no means a value play. But for such a strong growth company that’s performed so well through the years, I’d argue that CJT is a relative bargain for growth seekers.