3 Top TSX Stocks That Have Dropped up to 80% YTD

Should you buy the dip?

| More on:
A stock price graph showing declines

Image source: Getty Images.

While the market has entered a bear zone this week, some TSX stocks are down significantly higher. Even if there are a number of beaten-down names, very few of them offer value for long-term investors. So, buying a stock only because it is trading at record lows could be imprudent.

Here are three top TSX stocks that have shown immense weakness this year.

#1: Aurora Cannabis

Aurora Cannabis (TSX:ACB)(NASDAQ:ACB) stock lost its sheen a while back. This year, it has dropped around 80% and is currently trading at all-time lows. It has been a terrible year for cannabis investors. However, sadly, pot stocks might continue to trade weak because of changing macro situation and their deep-rooted sectoral challenges.

Aurora Cannabis has been struggling for quite a while now. Its declining revenue growth and expanding losses speak for themselves. To add to the investors’ woes, Aurora kept diluting its equity as a last resort to finance its operations. In addition, it recently announced the sale of its key facilities in its cost-cutting initiatives.

So, things look ugly for Aurora Cannabis. The legalization of cannabis in the U.S. could be game-changing for the sector. However, that might not happen anytime soon. Driven by its weak fundamentals and sectoral weaknesses, ACB might continue to dig deeper — at least in the short to medium term.

#2: Ballard Power

Canada’s fuel cell stock Ballard Power Systems (TSX:BLDP)(NASDAQ:BLDP) has been no different. It has lost 55% so far and is currently trading at its 30-month lows.

Ballard makes hydrogen fuel cells for heavy commercial vehicles and the stationary power market.

As you must have known by now, rising interest rates disproportionately weigh on fundamentally weak companies. In the case of BLDP, it has seen flattish revenue growth and consistent losses. So, broad market weakness has notably pulled down Ballard stock this year.

Even if hydrogen cars and fuel cells are the next big thing, they are still in a nascent stage. They have been facing exorbitantly higher costs and lack of infrastructure problems for long. So, Ballard will take a long time to create a meaningful shareholder value. Thus, the opportunity cost at the moment looks big.

#3: goeasy

Canada’s top consumer lender goeasy (TSX:GSY) also felt the heat of the recent broad market weakness. It has declined 45% this year and is currently trading at its 52-week low.

GSY lends to non-prime borrowers with interest rates starting at 19.99%. Its omnichannel presence, diverse product base and significantly large addressable market have driven above-average growth for GSY in the last decade.

The stock created massive value and returned over 1,800% in the last 10 years, thanks to its superior financial growth.

However, a weaker-than-expected quarterly performance in Q1 2022 and rising interest rates weighed on the stock this year. Though goeasy’s operation cost could increase amid rising rates in the next few years, it could pass on a significant chunk of it to its customers.

Also, on the valuation front, GSY stock looks well placed and is trading 11 times its earnings. So, once the market calms, investors can expect GSY to change its course.

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 has no position in any of the stocks mentioned. Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned.

More on Tech Stocks

man sitting in front of 3 screens programming
Tech Stocks

Shopify Stock or Microsoft Shares: Better Buy for the AI Revolution?

Shopify (TSX:SHOP) and Microsoft (NASDAQ:MSFT) are two of the most impressive growth stocks to watch, as tech slips further from…

Read more »

A bull outlined against a field
Tech Stocks

1 Tech Stock You’ll Be Glad You Bought When the Bull Market Starts

The stock market 20-month-long muted growth could be coming to a climax. You might want to own this tech stock…

Read more »

Businessman holding AI cloud
Tech Stocks

Before You Buy NVIDIA, Here’s an AI Stock I’d Buy First

NVIDIA (TSX:NVDA) is a great company, but one TSX AI stock is a better value.

Read more »

sale discount best price
Tech Stocks

2 Growth Stocks to Buy Every Time They Go on Sale (Like Now)

The right growth stocks are worth buying in almost any market, but they are especially attractive when they come with…

Read more »

stock data
Tech Stocks

Better Tech Trend for Investors: AI or Graphene?

Even though it’s the newer of two technologies, AI has outpaced graphene by a significant margin in the corporate world.…

Read more »

Man considering whether to sell or buy
Dividend Stocks

DND Stock: Buy, Sell, or Hold?

DND stock (TSX:DND) fell by 17% after producing earnings that once again fell below analyst estimates. But does that mean…

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Tech Stocks

This Stock Is up 1,440%, But You Can Still Buy it

Constellation Software is a superb company that has made its long-term investors incredibly rich. And it's a good value today.

Read more »

Car, EV, electric vehicle
Tech Stocks

Tesla and Apple Have This 1 Trait in Common, and It’s Making Investors Rich

Tesla and Apple have a lot in common. But this one trait of building an ecosystem is boding well for…

Read more »