Navigating a downturn in the market can feel a bit tricky. Yet, it can also open doors for investors who know where to look. When stock prices take a dip, it means that even high-quality companies can become available at prices that look more attractive. The key is to identify solid businesses with strong underlying fundamentals that might be temporarily undervalued because of broader market conditions affecting the overall market. So, let’s look at two that offer it up on a silver platter.
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Goeasy
One company that fits this description is goeasy (TSX:GSY), a leading provider of non-prime consumer loans in Canada. goeasy has shown consistent growth over the years by offering personal loans and leasing household goods. In the most recent earnings report for the last three months of 2024, goeasy reported a significant 20% increase in the amount of loans they originated, reaching $650 million. The company’s revenue for that quarter was $310 million. This is an 18% increase compared to the same period the year before. The net income also saw a substantial rise, coming in at $55 million. A 22% increase year over year.
goeasy’s strong performance can be attributed to the fact that its customer base is growing. Plus, it’s offering more products. The company’s focus on lending responsibly and providing good customer service has resulted in a low loan default rate of 4.5%. This is quite good in the non-prime lending sector. Additionally, goeasy has been investing in online platforms to make things easier for customers and to streamline their own operations.
BAM
Another company that might be worth considering during a market dip is Brookfield Asset Management (TSX:BAM), a global alternative asset manager with over US$600 billion in assets under its management (AUM). Brookfield specializes in various areas, including real estate, infrastructure, renewable power, and private equity.
In the latest earnings release for the fourth quarter of 2024, Brookfield reported distributable earnings of US$1.2 billion. This is a 15% increase compared to the same quarter in 2023. The company’s fee-bearing capital also grew to US$375 billion, reflecting strong fundraising efforts and confidence from investors.
Brookfield’s diverse portfolio and its global presence put it in a good position to take advantage of various investment opportunities around the world. The company made a recent acquisition of a major European infrastructure firm for US$5 billion. This is expected to strengthen its infrastructure business and contribute to its earnings growth in the future. Brookfield’s careful approach to investing and its expertise in managing operations have historically delivered strong returns for its shareholders.
Bottom line
Investing when the market is down requires a focus on companies that have solid underlying businesses and good prospects for growth. Both goeasy and Brookfield Asset Management have shown that the stocks are resilient. Plus, they have the ability to generate strong financial results. By doing thorough research and considering companies like these, investors can potentially benefit from market downturns and position themselves for future gains as the market recovers.
