With the S&P 500 officially entering bull market territory, many patient investors may be wondering if it’s a good time to get a toe back into the waters. A rise of 20% off the lows in the S&P 500 officially marks the start of a bull market. Still, a move off a local low or high seems quite arbitrary. As such, investors need not pound the table just because the bear has passed the torch over to the bull.
Value always matters, and in this piece, we’ll consider two mid-cap names that may be in a spot to continue rewarding investors willing to hold through thick and thin. Mid-cap stocks aren’t everybody’s cup of tea. But for those patient investors, I think there’s more value to be had as the great American bull market looks to help inject a bit of enthusiasm over here in Canada, even with a recession on the horizon.
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StorageVault Canada
First up, we have the $2.3 billion self-storage unit firm StorageVault Canada (TSX: SVI). While mid-cap stocks tend to be a rougher ride than mega-caps, on average, I view SVI stock as one of the names that investors can comfortably hang onto for the long haul, even when the winds of recession move in.
The business of self-storage is pretty easy to understand. Though consumer spending could grind to a halt as inflation and macro headwinds weigh, I see the demand for “real estate for belongings” remaining quite resilient over the next few years.
Undoubtedly, many people moved to the suburbs during the pandemic amid the rise of remote work. Now that things have returned to normal (for the most part), many employees may be asked to return to the office, at least on a part-time basis. This could translate to a larger migration back to the big cities. Smaller apartments mean less space for one’s belongings and potentially greater demand for storage units near major cities.
Aside from this catalyst, StorageVault is likely to keep doing what it does best: acquisitions. Over the past year, the firm made more than a handful of small-scale deals. Such deals should help drive growth and provide the firm with opportunities to create value via synergies. With a proven track record of growing via mergers and acquisitions, I continue to praise StorageVault as one of the better mid-cap growth stories in Canada.
The stock is off 16.4% from its late-2021 highs — highs that I think could be reached by year’s end, even if a recession comes to Canada.
Cargojet
Up next, we have cargo airline Cargojet (TSX: CJT), which is coming off one of its worst selloffs in years. It’s hard to believe that the stock has shed just north of 60% of its value since peaking back in November 2021. It’s been a painful plunge, but one that may be getting a tad long in the tooth. The $1.7 billion company won’t feel the weight of macro headwinds forever.
As the recession comes and goes, consumer spending is bound to pick up again, and e-commerce will be alive and well again. Once it is, Cargojet stands to be a huge beneficiary alongside the numerous digital retailers that suffered massive falls from grace in 2022.
In the meantime, investors must be patient and prepare for turbulence. I have no idea when the winds will move back in the cargo carrier’s favour. Regardless, I’m a fan of the risk/reward scenario here at around two times price-to-book (P/B) and $96 and change per share.
