When you are looking for beaten-down stocks, make sure you pick the tough ones, i.e., the ones that are fundamentally strong to get up after the beating. Not all companies fall in this category, and for many of them, one long-term downward motion is enough to finish their capital appreciation potential for good.
But there are several down-trodden TSX stocks that you can buy now and be reasonably sure they are going to pay off well in the long-term.
Real estate managers company
Real Matters (TSX:REAL) is a technology company in the real estate sector, which unfortunately has not benefited from the sector-wide growth momentum of either, at least not since its 2020 peak. The company was on a tear well before the pandemic, and the stock rose over 200% in 2020 alone.
The post-pandemic growth momentum was quite substantial, and if an investor had bought the company when 2019 started and sold at the 2020 peak, they would have grown their capital by over 700%.
But it has been slipping ever since. The 77% fall since the 2020 peak has pushed the stock down to a single-digit price tag, and there is no end in sight. The last quarter’s results, while not very promising, were not too discouraging either, and the company claims that it’s on track to achieve its fiscal objectives by 2025. And if you believe in the potential of its business model and market penetration, buying now when the stock is beaten down can be a smart move.
A fuel cell company
Fuel cells, while not a very economical option right now, can be a great alternative or supportive technology to the existing green tech that relies primarily on batteries. But its demand is slowly rising in the specific markets, especially ones that have experienced the inherent flaws of certain green power generation methods like wind and solar. And that’s good news for a fuel cell company like Ballard Power Systems (TSX:BLDP)(NASDAQ:BLDP).
Ballard is a mature company. It has a market capitalization of $4.8 billion, and that’s after it has fallen 67% from its 2021 peak. That fall makes it a relatively beaten-down stock, at least in the short-term context. And if fuel cells are expected to take off globally, a mature fuel cell company like Ballard, with a well-known product line and global reach, is very well-positioned to thrive, and the stock will most likely follow.
An air purification company
Xebec Adsorption (TSX:XBC) is not at a great place right now. The stock started falling in January 2021, and the slide has continued almost unabated so far and has dropped 78.4%. That’s a compelling discount tag, especially if you believe the company can “reboot” and the stock would start growing as it did before the pandemic, when it rose over 4,000% between January 2017 and February 2020.
The company has lived through its glory days, but it has repositioned itself as a potentially influential player in the currently evolving green economy. It has multiple business avenues and expertise, including the installation of renewable gas infrastructure and hydrogen purification. Its wide range of products allows it to cater to the needs of various different industries.
The three are not exactly undervalued stocks right now, but they are pretty beaten down. But the discount tag they offer is not the only attraction of these potentially explosive stocks. Under the right market conditions, these stocks have the potential to make you very rich, that is, if you can stick with them long enough.