The U.S. regional banking crisis caused more market rumbles on Tuesday, adding pressure to the broader basket of Canadian bank stocks. Undoubtedly, the surge in volatility is a good thing for the value hunters out there who aren’t frightened by steep plunges and new risks. Indeed, dip buying can pay off in a huge way if you play your cards right. For those who braved the market chaos back in the fourth quarter (Q4) of 2022 or January 2023, the rewards have come quite quickly.
That said, it’s unclear as to which direction Mr. Market decides to take next, as investors ponder when the U.S. regional banking crisis will come to a conclusion. Words by billionaire industry leader Jamie Dimon were encouraging. But it doesn’t seem like investors are ready to subscribe to the man’s views that the crisis may be nearing its end.
Dimon is a brilliant mind. And when he speaks, it can pay huge dividends to listen up. That said, nobody knows with precision when the U.S. banking fiasco will end and what the implications will be for dip buyers. In any case, the biggest and best banks have more than what it takes to hold their own as regionals fumble at the hands of questionable investment management that’s challenged the confidence of the depositors they do business with.
In this piece, we’ll have a closer look at two intriguing stocks that took quite the tumble on Tuesday, as risk appetite took a few steps back at the hands of more banking sector woes.
Canadian crude kingpin Suncor Energy (TSX:SU) felt the selling pressure, as oil slipped more than 5% on the day to US$71 and change per barrel. Suncor shares plunged by 4.8%, sending the name to its year-to-date lows. As shares look to flirt with 52-week lows, investors should be ready to consider inching into a contrarian position.
At the end of the day, Suncor is an energy firm that has a lot going for it. It’s taking steps to improve its safety track record and has made smart deals to improve its dominant position in the oil patch. Sure, oil moves will add to the volatility. However, a nearly 5% drop in a single day seems excessive, especially given a recession in Canada is likely to be shorter-lived in duration.
Extreme volatility ought to be expected from an energy firm. Buying dips and collecting dividends could be a strategy that, in due time, pays off for Canadian investors.
Cineplex (TSX:CGX) pulled back around 2.2% on Tuesday, even though bank and oil woes had nothing to do with the movie business. Looking ahead, Cineplex has a strong line-up of releases that could help the firm fuel its ongoing recovery. The stock is up a respectable 8% year to date but could be in a spot to accelerate gains, as the box office looks to keep flexing its muscles.
Further, I think there’s still quite a bit of pent-up demand for blockbuster flicks. Streaming is getting old. And movie theatres are starting to feel new again. Combine the impressive movie slate with the beefed-up Scene+ rewards program, and the Cineplex turnaround story looks that much more tempting.
At 0.65 times price to sales, CGX stock looks incredibly cheap. There’s some doubt about the performance through a recession. However, I think the stage is set for Cineplex to impress.