The Canadian stock market saw a slump in April after the U.S. March inflation numbers made economists bearish on rate cuts. Since April 2022, the TSX has been sensitive to interest rate updates as a sharp jump in rates from 0.25% to 5% pulled money out of the market. Those paying $25 interest are now paying $500 in interest, leaving little money for expansion and investments. Consequently, companies with high leverage saw their share price slump to its lowest. The declines have created an opportunity to buy two cheap stocks in your Tax-Free Savings Account (TFSA) before they get expensive.
Two cheap stocks to add to your TFSA
BlackBerry stock
BlackBerry (TSX: BB) stock has been trading near its 20-year low since February when the company renewed its debentures at a higher interest rate. Its primary shareholder Fairfax Holdings increased its stake in BlackBerry in November 2023 as the company changed CEOs and initiated a restructuring. While the revenue decline is expected to continue in fiscal 2025, the company is focusing on becoming profitable. The first step to achieving profitability is to reduce costs and turn free cash flow positive.
Although BlackBerry’s earnings are yet to reflect any improvement, there are signs of growth. Its Internet of Things (IoT) business saw revenue growth after two years. Its QNX royalty backlog increased to $815 million in fiscal 2024 from $640 million a year ago.
The transition to 5G is challenging, but the 5G ecosystem is opening up various growth opportunities for IoT security and software. BlackBerry is in a high-growth market, which is also highly competitive. So companies like AMD and Magna International are collaborating with BlackBerry for robotics and Advanced Driver Assistance Systems (ADAS) solutions. This hints that BlackBerry has long-term growth potential once these devices become the new normal.
Now is the opportunity to buy Blackberry stock below $4 and hold it for the long term. Once the company is out of the headwinds, strong growth awaits for shareholders who hold the stock.
Hive Digital Technologies
Speaking of holding, the famous term Hodl derived from the crypto market does hold potential. Bitcoin moves in tandem with investor sentiment and economic certainty. Earlier this year, the Bitcoin price began to rally as there were hopes of an interest rate cut. But the March inflation numbers deflated those hopes and Hive Digital Technologies (TSXV:HIVE) stock fell below $4 after rising closer to $6. Hive has ventured into providing high-performance computing space to rent, but its main source of income is still Bitcoin mining.
The crypto miner has an inventory of its mined Bitcoin that makes its stock price sensitive to Bitcoin prices. At the same time, its cloud services reduce the downside risk and generate relatively predictable revenue. While you can’t buy Bitcoin through the TFSA, you can buy Hive shares as they trade on the TSX.
With Hive, you can adopt both short- and long-term investing approaches. Consider buying Hive stock at or below $4 as its downside is limited. You can continue buying the stock whenever it falls below $4 and accumulate a decent number of shares. And wait till the next crypto bubble to sell the stock. Since you are buying Hive shares in smaller quantities as and when it falls to $4, you can sell them in small quantities in a crypto bubble to take advantage of the rally and not miss out on selling out of greed.
Frequent buying and selling of shares for trading is not allowed in a TFSA. However, you can keep accumulating shares for years and sell them in small portions after holding them for a long time.
