If a broader equity index, such as the TSX or the S&P 500, trades 20% below all-time highs, it is defined as a bear market. Several equity indices entered bear market territory in 2022, as investors were worried about inflation, rising interest rates, supply chain disruptions, and geopolitical tensions.
While the S&P 500 fell over 20% in 2022, the tech-heavy Nasdaq Composite Index declined around 35%. The selloff was even more exaggerated among high-growth tech stocks that lost around 80% in market value last year.
Bear markets are painful but also provide investors with an opportunity to create long-term wealth. For instance, every bear market has been eventually replaced by a multi-year bull run, allowing investors to enjoy inflation-beating returns over time.
Moreover, it’s impossible to time the equity markets, making bear markets the best time to start investing. For example, a $10,000 investment in January 2003 would be worth $64,844 in December 2022, according to a report from Visual Capitalist.
In this period, investors witnessed multiple bear markets, including the dot-com crash, the financial crisis, the COVID-19 pandemic, and the inflation-induced selloff in 2022. However, seven of the 10 best trading days took place during bear markets. Additionally, if you missed the 10 best trading days in this period, your investment value would be significantly lower at $29,708.
So, let’s see where you can invest right now and benefit from outsized gains when market sentiment recovers.
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Is GFL Environmental stock a good buy?
GFL Environmental (TSX: GFL) is the fourth-largest diversified environmental services company in North America. Valued at a market cap of $16.5 billion, GFL provides solutions such as solid waste management, liquid waste management, and soil remediation.
In recent months, GFL has sold off non-core assets and used the proceeds to reduce balance sheet debt. Despite its massive size, GFL is forecast to increase sales from $6.76 billion in 2022 to $7.8 billion in 2024. Its adjusted earnings are estimated to expand from $0.49 per share to $1.24 per share in this period.
Priced at 2.2 times forward sales and 36 times forward earnings, GFL stock might seem expensive. But analysts remain bullish and expect GFL stock to gain 12% in the next 12 months.
What is the target price for Stantec stock?
Valued at $10 billion by market cap, Stantec (TSX: STN) provides consulting services in verticals such as engineering, interior design, landscape architecture, and project management to private and public sector clients.
In the last 10 years, Stantec has returned 271% to shareholders after adjusting for dividends. It currently pays investors an annual dividend of $0.78 per share, translating to a yield of just 0.9%. However, these payouts have risen at an annual rate of 9.5% in the last 11 years.
Stantec stock is priced at 25 times forward earnings, which is very reasonable for a growth stock. Despite an inflationary environment, it is forecast to increase earnings by 15% annually in the next five years. Analysts tracking the TSX stock expect shares to surge over 10% in the next 12 months.
