The S&P/TSX Composite Index shed 94 points on Thursday, September 7. Some of the worst-performing sectors included battery metals, base metals, telecoms, and information technology. The odds of a Canadian recession have markedly risen in recent weeks, spurring volatility in the stock market. Today, I want to zero in on three no-brainer stocks that I’d look to snatch up in the event of a stock market correction. Let’s dive in!
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Here’s why you should “be greedy when others are fearful” in a correction!
Warren Buffett is thought to have coined the now oft-repeated adage; “Be fearful when others are greedy” and to “Be greedy when others are fearful.” This is not some advocacy for going against the grain. Indeed, it speaks to the core of Buffett’s value investing philosophy. A bull market typically produces feelings of invincibility among investors, causing many to ignore value investing tenets. Meanwhile, a bear market often produces the opposite effect, and investors are unwilling to take advantage of discounted equities due to the perceived risks of loss in the near term.
History has proven the merits of Buffett’s adage time and again. In the event of a stock market correction, below are the king of no-brainer stocks I’d look to snatch up for cheap.
This is the first no-brainer stock I’d buy in a market dip
goeasy (TSX: GSY) is a Mississauga-based company that provides non-prime leasing and lending services under the easyhome, easyfinancial, and LendCare brands to consumers across Canada. Shares of goeasy have dropped 9.6% month over month as of close on Thursday, September 7. Meanwhile, this no-brainer stock is still up 12% in 2023. Investors can see more with the interactive price chart below.
This company is already an attractive target when we consider its fantastic earnings growth and the growth in its loan portfolio. However, goeasy also demonstrated why this is a no-brainer stock to target in a correction back in 2020. The March 2020 stock market crash was spurred on by the beginning of the COVID-19 pandemic. Shares of goeasy hit a low of $21.08 per share during the worst of the March 2020 pullback.
Investors who took this opportunity to add discounted shares of goeasy reaped a phenomenal reward in less than a year’s time. goeasy stock posted a high of $107.89 in the middle of January 2021.
Seek exposure to automation in a correction with this exciting stock
ATS (TSX: ATS) is a Cambridge-based company that provides factory automation solutions to a worldwide client base. Its shares have jumped 7.5% over the past month. Meanwhile, the stock has surged 40% in the year-to-date period.
In the first quarter (Q1) of fiscal 2024, ATS delivered revenue growth of 23% to $753 million. Moreover, adjusted basic earnings per share (EPS) rose to $0.69 compared to $0.57 in the previous year. ATS’s Order Backlog rose 305 to $2.02 billion compared to $1.55 billion in Q1 fiscal 2023. This no-brainer stock is geared up for huge earnings growth and would be a worthy pick-up if discounted in a correction.
One more no-brainer stock I’d stack in a stock market correction
Air Canada (TSX: AC) is the third and final no-brainer stock I’d scoop up in a correction. This is a growth stock that has made fortunes over the past 15 years and has the potential to do it again in the years ahead. Shares of Air Canada have climbed 11% so far in 2023.
Canada’s top airliner was hit with major turbulence during the COVID-19 pandemic. Fortunately, it had learned its lesson during the Great Recession. The company had plentiful cash reserves to draw upon, as it was forced to dramatically draw down its business operations for months in 2020, 2021, and 2022. In Q2 2023, Air Canada showed that it had stormed all the way back as it delivered operating revenue growth of 36% to $5.42 billion. Meanwhile, its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) surged a staggering $1 billion year over year to $1.22 billion.
This no-brainer stock currently possesses an attractive price-to-earnings ratio of 15. I’m looking to stack as many shares of Air Canada as I can if its stock is discounted further in a correction.
