It’s a good time to be a dip buyer, even though it may not entail quick gains in this rather sluggish market. Indeed, buying the dip tends to work well when the bull is in the driver’s seat. Right now, the TSX Index is off more than 11% from its high. As the tug of war between the bulls and the bears continues, only time will tell who will win.
Regardless, investors know that the fortunate tend to favour the bulls in the long run. The longer your time horizon, the more the odds will be in your favour, and the more opportunity you’ll have to run alongside said bulls.
In this piece, we’ll look at a trio of stocks that I think may be due for a bounce over the next 12-18 months.
Air Canada: Prepare for more turbulence
Air Canada (TSX: AC) stock has been up against it since the pandemic began. Since the dark days of lockdowns, the company has been enjoying a bit of relief — not quite enough to power a rally to pre-pandemic heights, however. With a recession likely approaching and a new variant of COVID-19 that could curb the air travel scene’s recovery, the stock has been feeling a heavy weight on its shoulders once again.
Despite the uncertain outlook, I’m still a fan of the firm’s ability to adapt to tough times. Indeed, it’s hard to imagine things will get much worse as lockdowns seem out of the question for now. In any case, the stock’s down 29% from its 52-week highs and could be headed lower as consumer expectations fall flat. With low expectations, though, could come a higher chance of a surprise upside beat. Indeed, the stock looks cheap going into 2024, even as we brace for more turbulence.
Cineplex: A swift recovery on the horizon?
Cineplex (TSX: CGX) stock is also unlikely to see pre-pandemic highs anytime soon, especially as consumer headwinds return. Though the box office heated up during that Barbenheimer summer weekend, it will be tough to top such blockbuster hits. In any case, I view the long-term trajectory as intriguing while the stock goes for deep-value multiples.
At 0.4 times price to sales, shares are heavily discounted. And if Taylor Swift’s cinematic performance delivers, CGX stock may be in for a swift recovery in 2024!
CIBC: Get paid while you wait
CIBC (TSX: CM) is a beaten-down bank stock that boasts a yield of 6.71% at the time of writing. As the downside continues, the yield could break 7%. That’s a big deal for income investors who also want to take on the role of a value hunter.
At 10.5 times trailing price to earnings, CM stock is also quite cheap, even given the economic headwinds that could weigh for another year. My bet is CM stock bottoms before the worst of the recession has a chance to touch down. At $51 and change, the stock looks like a top dividend pick for contrarians!
Do be ready for some tough quarters, though. Interest rates will pressure the housing market, and CIBC could face quite a few provisions.
