Markets do not look ready for recovery just yet, even after their months-long weakness. The TSX Composite Index has lost 12%, while the S&P 500 has dropped a notable 20% so far in 2022. However, broad market indices seem much well placed, as some top stocks have tumbled even 70-80% in the same period. Here are three investor favourite Canadian names that are currently trading at record lows.
Air Canada
Air Canada (TSX: AC) stock had a fairly positive start to the year, but a host of challenges soon pulled it down. Thus, it has declined nearly 40% in the last three months and is currently trading at its 52-week lows.
Never-ending pandemic woes, sky-high jet fuel prices, and rising recession fears have weighed on AC stock of late. While rising cost pressures from fuel prices could effectively be passed on to flyers, lower discretionary spending due to potential recession brings a real risk for AC’s recovery.
Global airlines are having a hard time tackling back-to-back challenges, be it the pandemic, the war in Europe, and now the economic downturn. Travel will likely again be among the most hit sectors in case of a severe recession, which would delay airlines’ long-pending recovery.
However, Air Canada has a fairly strong liquidity position compared to its peers, which will likely aid it in staying strong in difficult times. On the other hand, a prolonged, more severe recession could dent AC stock.
Nuvei
Canadian payment processor stock Nuvei (TSX: NVEI)(NASDAQ: NVEI) has almost been on a consistent decline since last October. It has slid from $180 to $40 levels, eroding nearly $20 billion of its market cap.
Nuvei saw solid growth last year on the financial front, but the stock went too far, too soon. Interestingly, NVEI is currently trading 63 times its earnings, despite such a vertical fall. The stock still does not seem attractive from the valuation perspective, and steeper rate hikes could continue to weigh.
Nuvei provides payment platforms to a bunch of clients from sports gaming companies to travel websites and from e-commerce to cryptocurrency platforms. Its revenues doubled last year, with healthy profit margins. In the medium to long term, Nuvei management has given an optimistic financial growth outlook.
Nuvei looks attractive, but its valuation has long been the thorn, especially amid uncertain broader markets and looming rate hikes. Aggressive investors who have the stomach for its large swings can still consider it at these levels. However, it could take a while for conservative investors to jump on NVEI.
Aurora Cannabis
Aurora Cannabis (TSX: ACB)(NASDAQ: ACB) is a TSX stock that has seen the biggest value destruction over the years. In the last 12 months, it has lost 85% and is currently trading at its all-time lows of $1.6.
Cannabis stocks have lost their sheen in the last few years due to their chronic funding crunch and intermittent profitability. Aurora Cannabis has seen declining revenue growth and has been endeavouring on cost-cutting initiatives for years. However, the company is nowhere close to profitability. There is also little possibility of opening up the U.S. market for cannabis players in the foreseeable future.
Now, a potential economic downturn could make things worse for Aurora Cannabis and peer pot companies. Thus, stocks could see more downside on weaker quarterly earnings prospects and volatile broader markets.
