The Canadian stock market turned negative in August after posting strong gains in the previous two months. The TSX Composite benchmark erased nearly 1.6% of its value last month after rallying 5.4% in June and July combined. This broader market weakness was also partly responsible for triggering a selloff in some fundamentally strong TSX stocks that may resume their upward journey in the coming months.
In this article, let’s take a closer look at two of the worst performers on the Toronto Stock Exchange from August and find out whether they’re worth buying on the dip in September 2023.
Nuvei (TSX:NVEI) was the worst-performing TSX Composite component in August, as its share prices tumbled by 45.8% during the month. It’s a Montréal-headquartered electronic payment technology provider with a market cap of $3.4 billion. After witnessing a selloff last month, NVEI stock currently trades at $24.39 per share with 29.1% year-to-date losses.
Besides a selloff in most Canadian tech stocks, Nuvei’s weaker-than-expected quarterly earnings, released on August 9, could be blamed for its dismal stock performance in August. In the second quarter of 2023, the Canadian tech firm’s total revenue rose 45.3% YoY (year over year) to US$307 million, with a solid 68% jump in its total volume. However, its adjusted quarterly earnings of US$0.39 per share fell 23.5% from a year ago, missing analysts’ expectation of US$0.46 per share.
But it’s important to note that Nuvei’s latest quarterly earnings miss was mainly due to a temporary increase in its finance costs. That’s why you can expect the company’s bottom line to improve in the coming quarters and help its stock recover fast, making it a great Canadian stock to consider buying on the dip in September.
With 16.5% losses during the month, Bombardier (TSX:BBD.B) was also among the five worst-performing TSX Composite components in August 2023. After this selloff, the shares of this Dorval-headquartered business jet manufacturer currently trade at $55.12 per share with $5.5 billion in market cap, up 5.5% on a year-to-date basis.
Bombardier held its second-quarter earnings event on August 3. During the quarter, the Canadian aircraft company’s revenue climbed by 7.6% YoY to US$1.7 billion with the help of a robust 19% jump in its aftermarket revenue. Despite facing a challenging macroeconomic environment, Bombardier’s adjusted quarterly earnings stood strong at US$0.72 per share, crushing analysts’ estimates of US$0.28 per share by a big margin. Despite these solid financial results, however, Bombardier’s stock tanked by 19% in four days following its earnings event amid the broader market weakness.
Analysts expect Bombardier’s full-year 2023 revenue to rise 12.7% from a year ago to US$7.8 billion. Similarly, its annual earnings in the ongoing year are expected to be around US$3.56 per share, reflecting massive improvements over its adjusted full-year 2022 earnings of US$0.74 per share.
Its strong financial growth trends, consistently improving profitability, and the management’s focus on further reducing costs make Bombardier stock look really undervalued to buy for the long term after its recent declines.