4 TSX Darling Stocks That Dug a Deep Hole in Investors’ Pockets in 2020

Amid the recent epic rally, some TSX stocks recovered, while some dug a deep hole in investors’ pockets. Do you own these laggards?

| More on:

TSX stocks at large exhibited one of the fastest recoveries on record in the last five months. While some recovered, some stocks dug a deep hole in investors’ pockets.

Let’s see which ones offer growth prospects and which ones could tumble more.

Bombardier: -80%

Once top train and plane maker Bombardier saw its troubles multiplying amid the pandemic this year. It has been struggling with a hoard of debt and a weak operational efficiency for years. The lower demand amid the virus outbreak only shoved it further into debt.

Bombardier stock has fallen from close to $2 levels at the beginning of 2020 to $0.4 today. Its asset divestiture like the Alstom deal could provide some relief in the short to medium term. However, improved demand in the post-pandemic world could play a bigger role in its recovery.

Interestingly, despite such a vertical drop in its stock, there is no telling whether Bombardier has hit bottom. It still remains a risky bet amid the surrounding uncertainties and its immense debt burden.

Cineplex: -70%

Entertainment giant Cineplex (TSX:CGX) was another laggard on the TSX this year. The stock has been immensely volatile this year and has lost more than 70% so far.

The stay-at-home orders amid the pandemic significantly dented its business. Its revenues in the second quarter fell 30% compared to the same period last year.

Interestingly, Cineplex announced that it would open all of its theatres last month. Even though fear might dominate patrons initially, it could at least start getting things back in action.

But that does not make Cineplex stock an attractive bet. A potential second wave of the outbreak could deter those re-opening efforts. The stock has so far rallied almost 60% since its record lows in March. However, that should not be perceived as a lasting recovery. Near-term uncertainties driven by the pandemic will likely make the stock more volatile.

Cenovus Energy: -50%

Integrated oil company Cenovus Energy (TSX:CVE)(NYSE:CVE) has lost more than 50% so far in 2020, underperforming TSX energy stocks by a wide margin.

Volatile crude oil prices significantly dented the global energy industry this year. Cenovus was no different. The company lost more than $2 billion in the first six months of 2020. It suspended dividends in April as cash retention became a necessity.

Cenovus Energy stock was among the top gainers among the relief rally in the second quarter. It has soared more than 200% since falling to record lows in March.

However, the outlook for the entire energy sector continues to remain gloomy. Cenovus Energy’s debt burden could be an added worry for investors, even if oil prices recover toward the end of the year.

Air Canada: -65%

The year 2020 flipped the fortunes for the country’s biggest airline company Air Canada (TSX:AC). Two subsequent quarters of losses and a significant cash burn have brought Air Canada stock to $17 today from $52 levels earlier in the year.

While travel restrictions in Canada were expected to ease in August, the government recently extended the curbs till September 30. That simply means the airline will likely operate at a trivial capacity, leading to more losses and a continued cash burn.

However, if we put aside pandemic worries for a moment, its market share, scale, and operational efficiency significantly differentiate itself from peers. Air Canada stock was among the top performers in the last decade, returning almost 3,500%. A faster-than-expected vaccine launch and easing travel restrictions could notably fuel Air Canada’s rally.

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 Vineet Kulkarni has no position in any of the stocks mentioned.

More on Dividend Stocks

A meter measures energy use.
Dividend Stocks

Is Fortis Stock a Buy, Sell, or Hold for 2025?

Fortis has increased its dividend annually for the past five decades.

Read more »

analyze data
Dividend Stocks

3 Dividend Stocks That Are Screaming Buys in November

Here are three top dividend stocks long-term investors won't want to ignore during this part of the market cycle.

Read more »

senior relaxes in hammock with e-book
Dividend Stocks

Generate $175/Month in Passive Income With a $30,000 Investment

Dividend aristocrats offer reliability, and many of them also offer generous yields. With sizable enough discounts, these yields can become…

Read more »

dividends can compound over time
Dividend Stocks

Best Dividend Stocks to Buy Now for Canadian Investors

These three stocks would be excellent additions to your portfolios, given their solid underlying businesses, consistent dividend growth, and healthy…

Read more »

data analyze research
Dividend Stocks

3 Undervalued Stocks to Watch in November

Not all undervalued and discounted stocks are destined or poised to make a comeback soon, and a protracted timeline can…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

The Perfect TFSA Stocks for Long-Term Growth

Two industry heavyweights are perfect stock holdings in a TFSA for long-term money growth.

Read more »

Make a choice, path to success, sign
Dividend Stocks

Is Fortis Stock a Buy for its Dividend Yield?

Fortis has increased the dividend for 51 consecutive years.

Read more »

Middle aged man drinks coffee
Dividend Stocks

Is Brookfield Stock a Buy, Sell, or Hold for 2025?

BAM stock recently jumped after beating earnings. But is it still a buy, or is it better to wait?

Read more »