2 Plunging TSX Stocks I’d Buy on the Way Down

Investors may wish to buy Badger Infrastructure Solutions (TSX:BDGI) and another top TSX stock on the way down going into year’s end.

| More on:
Hand writing Time for Action concept with red marker on transparent wipe board.

Image source: Getty Images

The TSX Index may be steadily marching higher again after a turbulent start to autumn 2021, but that doesn’t mean all names have participated in the sudden relief rally. Indeed, going into year-end, many unforeseen risks, most notably a COVID resurgence, could cause a vicious growth-to-value rotation similar to the one endured through most of the first half. With high inflation and interest rates likely to rise over the coming quarters in Canada, insisting on top TSX value stocks may be the most prudent strategy, especially for those looking to allocate more of their cash position into equities.

Nobody knows how long +4% inflation will last or if another COVID wave will bring rate hikes off the table again over lockdown fears, and its impact on global supply chains as well as economic growth. In any case, investors should demand a larger margin of safety so that their portfolios can better ride out what could be a more challenging 2022, better putting themselves in a spot to make money, even if broader markets sag.

In this piece, we’ll have a closer look at two TSX stocks that may be worth checking out after their recent dips. Prudent investors should look to dollar-cost average (DCA) into a full position, incrementally buying on the way down to lower their cost basis, rather than attempting to grab a falling knife all in one go.

Badger Infrastructure Solutions

Badger Infrastructure Solutions (TSX:BDGI) is a soil excavator that provides mobile, non-destructive services to its customers, many of whom are within the Albertan oil and gas (O&G) sector. Indeed, Badger offers a messy, albeit far safer solution than physical digging with heavy-duty bulldozers. Breaking gas pipelines and all the sort could have devastating consequences. And that’s why Badger may be on the right side of a secular trend in the infrastructure space. Non-destructive excavation is an intriguing niche that could pick up traction, as the economy attempts to reopen.

The stock has been in a bit of tailspin this year, now down around 30% off its peak levels. With a 2% dividend yield, Badger is a great contrarian play to bounce back in the post-COVID environment. With margin issues likely to resolve themselves over coming quarters, Badger appears to offer a solid risk/reward scenario for value investors who don’t want to be at risk of feeling a brunt should the markets become more fragile in the new year.

In short, the $1.1 billion company has the potential to be a wonderful one. And right now, shares appear too cheap to ignore after recent quarterly fumbles.

Lightspeed Commerce

Lightspeed Commerce (TSX:LPSD)(NYSE:LSPD) suffered a painful fall from grace, thanks in part to short-seller allegations. The stock crumbled nearly 8% on Friday, accelerating losses that now exceed 50%. Buying the dip in the e-commerce play would have resulted in quick losses thus far. That’s why investors keen on the fast-falling growth stock ought to implement a DCA approach with the name in particular.

It’s tough to tell what’s to happen as a result of short-seller allegations. Undoubtedly, if they hold true, shares could have further downside. On the flip side, if they’re proven baseless or greatly exaggerated, there’s no telling how much upside a stock could have over the near term. This isn’t the first time a Canadian tech stock fell under the target of a short-seller, and it won’t be the last. Many short-targeted Canadian stocks have moved on, but a handful crumbled under the pressure. Regardless, LSPD is a risky play only suitable for venturesome investors who understand the stakes.

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 recommends Lightspeed POS Inc.

More on Investing

Silver coins fall into a piggy bank.
Tech Stocks

How to Turn a $500 TFSA or RRSP Into $50,000

Are you looking to convert a $500 TFSA into $50,000? A little discipline and patience can help you achieve it.…

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

5 Things to Know About Cannabis Stocks Before 2023

Cannabis stocks like Canopy Growth (TSX:WEED) are struggling, but there are positives to draw on as well.

Read more »

Stocks for Beginners

3 Best-in-Class Stocks to Build Long-Term Wealth

Looking for stocks that might create generational wealth over the long term? Here's a top growth, value, and income stock…

Read more »

TFSA and coins
Dividend Stocks

TFSA Couples: How to Invest for $777 of Passive Income Each Month

The TFSA or Tax-Free Savings Account can be used to buy and hold a portfolio of blue chip dividend stocks…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

Investing in the Stock Market Could Turn Your $1,000 Into $100,000: Here’s How

The stock market can convert a $1,000 regular investment into $100,000 without making too risky bets. Here’s a simple strategy…

Read more »

Bank Stocks

3 Top Stocks to Buy Now in a Once-in-a-Decade Opportunity

Given their discounted stock prices, these three quality stocks offer a once-in-a-decade buying opportunity.

Read more »

Various Canadian dollars in gray pants pocket
Stocks for Beginners

Here’s an Absolutely Brilliant Way to Earn Passive Income

Here’s a simple and unique way to earn passive income that does not involve working more, buying a property, or…

Read more »

Make a choice, path to success, sign
Stocks for Beginners

Canadian Investors: 2 Once-in-a-Generation Buying Opportunities

You can grab these two once-in-a-generation buying opportunities in Canada right now to get super rich in the long term.

Read more »