The TSX Composite Index fell 4.5% in August and is now back in recovery mode. A 4.5–5% dip and a rally of equal momentum have been the trend throughout the year. These short waves of dip and rally have created active investing opportunities in growth stocks to help investors make quick profits. Not all growth stocks are moving in tandem with the market. Some stocks are facing fundamental issues, while others are falling because of the bearish market. Stocks that can make you some immediate profits are the second type.
Three growth stocks to buy on the dip
I have identified growth stocks that are enjoying a normal business environment.
HIVE Digital Technologies
HIVE Digital Technologies (TSX:HIVE) stock has been moving in tandem with the TSX Composite Index after the 2022 tech stock meltdown. If you want to monetize the index, buy Hive stock as it falls 40% and rises 60-120%.
This year, the crypto miner opened its graphics processing unit (GPU)-powered data centre to companies for a fee. Companies can power Web3, artificial intelligence, and high-performance computing projects through the Hive cloud. It will create a new revenue stream for the blockchain company and help it reduce volatility from crypto prices.
The stock is not range-bound but on a long-term growth trend. You can keep buying it whenever it falls 20–40% from its previous peak. For instance, the share price fell to $3.28 in March, down 40% from its February peak. It is currently down 39% from its July peak, making it an opportune time to buy the stock. The next rally could grow your money by 50-80% in a few months.
The business jet maker Bombardier (TSX:BBD.B) has had a robust second quarter as is reflected in its earnings. It is on track to meet its 2023 guidance of delivering 138 aircraft, which means it would have to make 87 deliveries in the second half after delivering 51 aircraft in the first half. The company’s debt situation is good, with no debt maturities till 2025.
Despite everything going fine on the business front, Bombardier stock slipped 23% in August as the TSX Composite Index fell. B stock has been moving in tandem with the market index. The only difference is the volatility. It is moving 15-20% up and down, creating an opportunity to seek quick returns from active investing.
Now is a good time to buy the stock while it trades below $55, 18.8% below its August peak. If it recovers to its high range of $67, you can make 22% returns. Consider buying the stock when it falls below $55 and selling it when it crosses $65.
The stock has breached the lower range of $55 thrice and recovered to the upper range twice this year. If you invested $1,000 each time, you would have made $340. Now is an opportune time to convert $1,000 into $1,170 in a month or two.
Even if the stock does not repeat this trend, Bombardier’s strong fundamentals can withstand a market downturn and drive growth in the long term. It is relatively safer to buy this stock on the dip.
Another stock moving along similar lines as the market is supply chain solutions provider Descartes Systems (TSX:DSG). The company is resilient and reported stable revenue and earnings growth in the second quarter. It has been making acquisitions through its cash reserves to expand its e-commerce logistics solutions.
Despite strong fundamentals, Descartes’s stock fell 8.8% between mid-July and mid-August and is now on the path to recovery. It has been hovering in the $99-$105 range, with some outliers.
You can invest in Descartes in two ways. Consider adding to your Descartes pool when the stock falls below $99 and reduce your overall cost through dollar-cost averaging. Keep holding for the long term as the company could benefit from North America’s liquified natural gas exports and e-commerce trends. You can also use the current volatility of Descartes stock to buy below $99, sell above $106, and pocket 7% returns.