No crystal ball can accurately predict the future performance of the stock market. However, several factors can help you identify stocks that are more likely to deliver better returns than others. Picking solid investments in a bear market is challenging, even for the most seasoned investor.
As of this writing, the S&P/TSX Composite Index is down by over 9% from its 52-week high. The weakness in the Canadian benchmark reflects a downturn in share prices across the board. When markets go down like this, some publicly traded companies are in a better position to deliver better returns than others.
Today, we will look closely at three bearish stocks that appear well positioned to deliver outsized returns if they come out of hibernation.
Ballard Power Systems
Ballard Power Systems (TSX:BLDP) is a $1.40 billion market capitalization stock that has been down on its luck for a while now.
The Burnaby-based company is a leader in proton exchange membrane fuel cells, power system development, and commercialization. The company primarily generates revenue through the design, development, manufacture, sale, and service of these fuel cells, serving clients in several industries.
As of this writing, the stock trades for $4.66 per share, down by 50% from its February 2023 high. While it might be down right now, the nature of its products and services set its investors up for substantial long-term wealth growth.
As greener alternatives to fossil fuels become more prevalent, fuel cell providers in nascent stages like Ballard Power Systems can gain more traction and grow shareholder value.
B2Gold
B2Gold (TSX:BTO) is a $5.79 billion market capitalization Canadian mining firm headquartered in Vancouver. The low-cost, senior mining company has several operations worldwide, including three operating open-pit gold mines in Mali, Namibia, and the Philippines.
The company focuses on acquiring and developing interests in mineral properties, primarily targeting gold deposits.
When markets are volatile, gold producers like B2Gold stock benefit from rising gold prices. It can make for a good pick in bear markets due to its ability to bounce back strong. Following the 2020 crash, the stock saw its share prices rise by over 150% in around six months.
It has declined for the most part since then. Well-capitalized, offering generous payouts with a 4.84% dividend yield, and boasting a safe payout ratio, it can be another solid investment to own when the bear market ends. As of this writing, it trades for $4.45 per share.
Cargojet
Cargojet (TSX:CJT) is a $1.39 billion market capitalization scheduled cargo airline headquartered in Mississauga. The company owns and operates a network of domestic air cargo co-loads between 16 major cities throughout Canada.
It also operates scheduled international routes for cargo customers across Canada, the U.S., Bermuda, Germany, the U.K., and Mexico.
While a stock consistently delivered stellar returns over the decades, the recent decline in demand and reduced consumer spending have negatively impacted its share prices. As of this writing, it trades for $80.64 per share.
When the economy eventually normalizes, it can benefit greatly from a recovery in e-commerce demand. Investing in its shares at current levels can set you up for significant long-term gains.
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Foolish takeaway
If you seek more immediate returns, B2Gold stock might be a better pick to capitalize on the market volatility. For a longer investment horizon, Cargojet stock and Ballard Power Systems stock can be good additions to your self-directed portfolio.
