The Silver Lining of Bear Markets: Opportunities for Long-term Canadian Investors

Bear markets provide investors with the opportunity to buy quality stocks on the cheap, bolstering portfolio returns.

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Unfortunately, bear markets are roadblocks that markets face on their path to long-term growth and prosperity. But what if we could see this as a good thing? What if we understood that bear markets are times to hunker down and beef up on quality, resilient stocks that have stable long-term growth profiles?

This is what I’ll explore today in this article.

Bear markets: Make your move to create outsized returns

Economic cycles are just that, cycles. Throughout history, they have caused the stock market to soar and sink in equal measure. However, in the long run, growth has won out, as North America has been on a clear path towards improvements. This has been driven by strong immigration, productivity gains, and an economy that’s supported by numerous essential businesses and policies.

Find a secular trend and load up on it

Secular trends are those trends that are expected to continue for the long run. They are supported by different factors and likely to continue to move in the same direction for the foreseeable future. In a bear market, everything gets hit – even quality stocks that are supported by these secular trends. And this is the opportunity.

Liquified natural gas

There are a couple of secular trends that I’d like to focus on here. The first is liquified natural gas. Coal continues to be one of the primary sources of energy globally. But since it’s also one of the dirtiest, there’s a desperate search for a cheap and reliable alternative. This is where North America’s natural gas comes in. It’s much cleaner than coal, yet it’s also cheap, abundant, and reliable. 

In the last 10 years, China’s LNG imports have increased 320%, India’s imports have increased 185%, and Europe’s imports have doubled. As their populations expand, standard of living rises, and urbanization grows, these countries will consume increasing amounts of energy. And they’re looking for cheap, reliable, and preferably, cleaner energy. North America’s LNG can bridge this gap and be a key fuel to power these rising economies.

Tourmaline Oil Corp. (TSX:TOU) is Canada’s largest natural gas producer and North America’s fifth-largest producer. Tourmaline has supply agreements with Cheniere Energy, the U.S.’s largest exporter of LNG. It also also stands to benefit from the completion of LNG Canada (est. by 2025). Clearly, the future for natural gas, and thus Tourmaline, looks bright.

And Tourmaline’s stock price has reflected this optimism. Any weakness brought on by a bear market would be a great opportunity to add the stock. I would, therefore, suggest adding it to your radar screen.


The second trend I would gain exposure to is the digitization trend. While many high-flying tech stocks have already crashed and burned, the true giants are still standing. And their prospects are better than ever. Let’s take CGI Inc. (TSX:GIB.A), Canada’s leading IT company. It’s a $28 billion IT and business consulting services firm that’s been steadily growing since 1976.

The company’s steady performance and value creation have been an example of true long-term growth and resilience. In fact, CGI is currently in the sweet spot of rapid growth, with the digitization trend going strong worldwide. Moreover, CGI’s organic growth will be complemented by its growth via acquisition plans. Today, CGI’s acquisition pipeline is robust, and when the time is right, the company will make its move. Investors can feel confident when this happens, as CGI has an exceptionally strong track record of integrating its acquisitions, which have consistently driven value for the company.

The bottom line

In closing, the point of my article is that bear markets offer us many opportunities to buy quality companies on the cheap. We must enter the market with this mindset and keep a list of stocks to buy on weakness, such as the two I mentioned in this article.

Finally, we should ready ourselves emotionally. We want to be ready to strike (buy), oftentimes, when fear is at its worse. This will allow us to take advantage of the bear market opportunity. The long-term gains are worth the effort and discomfort.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Karen Thomas has a position in CGI and Tourmaline. The Motley Fool recommends CGI and Tourmaline Oil. The Motley Fool has a disclosure policy.

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