Being a contrarian investor is never easy, especially when the paper losses begin to really mount in a hurry. And while buying the dip is not going to work out all of the time, I do think that whenever you see shares of a wonderful firm that you’ve been meaning to buy but just never got around to it (either due to valuation concerns or simply having something better at any given time), you should look to be a buyer.
Of course, buying dips can entail more pain to come because, as you may know by now, the market doesn’t know when you’ve finally hit the buy button. Indeed, the tide might not turn when it’s most convenient for you. In any case, the TSX Index is running fairly hot into the month of October.
While there’s a good chance the momentum holds through the fourth quarter, I’d be more inclined to buy the fairly underpriced, underloved names just in case the momentum plays leading this rally begin to falter a bit over the coming weeks and months.
Without further ado, here’s a pair of growth names I’d be willing to buy on the way down.
Source: Getty Images
Constellation Software
First up, we have shares of Constellation Software (TSX:CSU), which were beaten down last week after news broke that its founder, Mark Leonard, would be resigning due to health concerns. Indeed, whenever a legendary founder steps back or away, investors are sure to sell first and ask questions later. Undoubtedly, the reaction was quite overdone, especially on an intraday basis.
And while the recent bad news adds to the negativity surrounding the stock since it peaked out back in May, I still think the dip is more than buyable. The stock might be a bit pricey, even after tumbling into a bear market. Still, I don’t think all too much will change as Constellation’s other leaders step up in Mr. Leonard’s absence. Though Constellation stock is down 12% on the year, I’d not give up on the long-term growth story. It’s a great buy as most others panic about the implications of Leonard’s resignation.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX:ATD) is another fallen growth stock that’s a solid value going into Q4. Like Constellation, ATD shares are down on the year, now off 6% year to date. Despite the choppiness and unanswered questions following the lack of a 7 & i Holdings deal, I still think the name is worth patiently holding going into 2026.
The company has some menu innovation in store with its Guy Fieri partnership, which I dedicated a whole piece to. Additionally, there are bound to be more acquisition announcements in the coming months. Until then, it may make sense to be a buyer of the latest modest bounce to $74 and change. In short, ATD has the drivers in place to get its groove back. And in due time, I think it will be back to sustaining gains and earnings growth.
The bottom line
Constellation and Couche are two under pressure growth-by-acquisition firms that look cheap in an arguably lofty market. Though near-term pain could be in the cards for Q4, I like the long-term roadmap for both firms. I think it’s time to buy both names while they’re marked down.
