Some Canadian stocks have had a hard time over the years. Oil stocks were in the gutter in 2020, tech stocks in 2022, and bank stocks in 2008. If you’d been holding those stocks at those times, you’d probably have been scared. But if you’d held until today, you’d have been greatly rewarded, realizing gains that vastly exceed what you invested. In this article, I will explore three such Canadian stocks that are bouncing back stronger than they were before they fell.
Baytex Energy (TSX:BTE) is a Canadian energy stock that went to truly extreme lows in 2020. Thanks to the COVID-19 pandemic, oil prices briefly went negative in March 2020. Baytex Energy–which is not only an oil company but a heavily indebted one–predictably tanked. At one point, it fell as low as $0.30!
However, in 2022, oil prices started rising. Russia invaded the Ukraine, which led to a massive surge in the price of oil, from $82 at the start of the year, to $123 at its peak in the summer. Naturally, the prices of oil stocks rallied as well. From its 2020 low of $0.32, BTE went all the way up to $8.80, a 2,650% gain.
Later on, Baytex Energy stock started tumbling again, when oil prices fell. For a while, it looked like it was headed back to penny stock territory. However, this year, oil prices started climbing, and BTE stock along with them. Today, the stock goes for $5.94–closer to the 2022 highs than the 2020 lows.
Shopify Inc (TSX:SHOP) is a Canadian tech stock that took a severe beating during the 2022 tech stock crash. That year, tech stocks as a group declined about 30%, as interest rates began rising and earnings stopped growing rapidly.
Shopify stock was hit harder than most tech stocks in 2022. Over the course of the year, it declined by about 41% in price. It fell some 80% from the November 2021 high of $214 to the 2022 low of $37.
Why did Shopify stock get hit so much harder than other tech stocks in 2022? It comes down to earnings. Shopify was briefly profitable in 2021. It lost its profitability in 2022 when tech stocks declined in price, causing part of SHOP’s investment portfolio to lose value. For a corporation, a decline in the prices of stocks it owns is considered a “loss” even if the company doesn’t sell. This phenomenon caused Shopify’s profits to turn negative in 2022. Also, its revenue growth slowed down dramatically, at one point going as low as 13%. Sales growth rates between 40% and 90% were common in prior years.
2022 was a tough year for Shopify. Now, however, the company is once again growing rapidly, generating positive free cash flows, and rising in the markets.
EQB Inc (TSX:EQB) is a Canadian bank stock that crashed during the March 2023 banking crisis. In the spring of 2023, several U.S. regional banks collapsed when their depositors withdrew en masse and the banks didn’t have the liquidity (cash and treasuries) needed to pay them off. EQB stock sank precipitously in this period because it looked somewhat similar to the U.S. banks that collapsed: it was small, not systemically important, etc. Thankfully, EQB survived, and even reported rapid earnings growth in the quarter after the banking crisis subsided. Now, its stock is up for the year, and still trending upward!