Carrying on the positive momentum from last month, April has been a month of recovery (so far) for the TSX. While many sectors and industries are recovering, two have developed relatively stronger momentum. April might be a good time to add stocks from these industries to your portfolio and ride the recovery/growth momentum to its peak.
A gold stock
The S&P/TSX Materials Index has risen 15% since early March, and many gold mining stocks are riding a strong bullish momentum upwards.
However, many of these stocks are overvalued, and the inflated pricing may not last long enough for you to accumulate decent returns. B2Gold (TSX: BTO), on the other hand, is only modestly overvalued and is trading at a massive discount from its post-pandemic peak (2020) and a moderate discount from its pre-pandemic peak.
These discounts and the stock’s valuation may indicate more room for growth. BTO stock is quite fairly (moderately) valued compared to many other gold stocks riding the upward momentum. It has already gone up 20% in the last 30 days. Even though it’s a tall order, if the stock keeps growing at this pace for five consistent months, you may double your investment.
Another reason to consider this stock in April is to lock in the yield. It’s currently offering a decent 3.8% yield. The dividends are backed by a healthy payout ratio, so they seem financially stable as well.
A crypto stock
After hitting its lowest price point in March 2023, Bitcoin has made a strong recovery and is currently trading at over US$30,000. This naturally triggered the recovery of crypto stocks like Galaxy Digital Holdings (TSX: GLXY), which has risen 30% over the last 30 days.
It’s difficult to predict how long this bullish momentum will last and how far it will carry the stock. GLXY is nearing its 2022 peak, which will result in 4x growth if you buy this stock now.
That’s far more than what the underlying asset, i.e., Bitcoin, promises. It has only lost about half its value. So, at best, you may be able to double your capital if you buy Bitcoin right now. You can expect much more significant growth if the stock goes up to its post-pandemic peak of 2021, when it was trading at more than $40 a share.
Galaxy Digital Holdings can also be a good long-term holding. Even if it doesn’t reach its 2020 peak in this bullish phase, you may see the stock rise to that level in a few years. The overall returns could still be explosive compared to what you might achieve from this current trend.
Foolish takeaway
The current bull market phase of the two industries is reason enough to jump on the opportunity and add the two companies to your portfolio. They may offer decent returns by the end of the current bullish phase or powerful returns if you hold on to them long enough. B2Gold can also be a source of dividend-based passive income.
