Air Canada and Barrick Gold: Still Dirt-Cheap Stocks As Markets Rebound

Air Canada (TSX:AC) and Barrick Gold (TSX:ABX)(NYSE:GOLD) are down and out, even as the broader markets bounce back from September volatility.

| More on:

If you didn’t do some buying earlier this week, there’s a chance you may have missed a bottom in the Evergrande-induced pullback. And that’s thanks in part to U.S. Fed Chairman Jerome Powell. Did Powell cut the “correction” that almost everybody on Wall Street saw coming? Or is this mere upward volatility at the start of a trend that could continue lower into year’s end? Of course, nobody knows the answer. But there is a good chance that Powell’s words could have dampened the latest pullback, if not marked a bottom entirely.

Regardless, investors should continue to take advantage of recent dips in quality TSX stocks while they still can. And in this piece, we’ll check out two that are still cheap as markets look to close out a rocky September in the green.

Air Canada

Air Canada (TSX:AC) is the riskiest name on this list, but it arguably has the most upside over the next 12-18 months. As the Delta variant looks to peak over the coming weeks, the airlines and other reopening stocks could be due to get a bit of a relief rally. Still, there’s no telling what comes after this current Delta wave of COVID. Could another potentially more insidious variant of concern strike in the winter? It’s possible.

Nobody seems to know what to expect with this pandemic. It remains highly unpredictable, and as a result, Air Canada remains tough to get behind despite having the federal government standing in its corner with investment and support.

Over the medium term, Air Canada’s trajectory is likely to be dictated by how bad the pandemic gets. As the nation rolls out vaccine passports and measures to reduce the spread of COVID without having to shut everything down, I think Air Canada has the means to sustain a robust rally.

In any case, investors should look to average into a full position over time, as the air travel recovery trajectory is still hazy. If things go well, however, Air Canada stock could really lift off. Of course, you’ll need to pay the price of excess volatility and the potential for major downside risks.

If you’re young and can sleep well at night with AC stock in your portfolio, only then would I think about getting greedy with the name at these levels.

Barrick Gold

How low can Barrick Gold (TSX:ABX)(NYSE:GOLD) go? That’s the million-dollar question that we wish we had the answer to. Unfortunately, the stock is back into a rut, plunging 2.2% on a more cheerful day for the broader markets.

While Barrick gold is one of the best-run miners in the world, its price is heavily influenced by gold. Gold prices are tough to pinpoint. And you’d be best-served by not attempting to forecast its next move because odds are, you’ll be wrong.

That said, I am a fan of gold as a portfolio diversifier. I think it can improve your overall risk/reward with a single-digit percentage position. While Bitcoin may have more appeal, the benefits of gold as an investment should not go unnoticed. Holding it in periods of increased volatility and panic could really pay off. For now, gold is out of fashion, as are miners like Barrick.

Now with a 2% dividend yield, I’d look to be a buyer if your precious metals exposure is on the lower end. I don’t know if gold is heading back to US$2,000 per ounce. But I do think that the risk/reward in Barrick is attractive, assuming gold doesn’t violently implode on itself. Even if it did, odds are markets would be roaring, and with a diversified portfolio, you’d still be a net winner.

Should you invest $1,000 in Barrick Gold right now?

Before you buy stock in Barrick Gold, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Barrick Gold wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Investing

clock time
Bank Stocks

1 Magnificent Financial Stock Down 23% to Buy and Hold Forever

This top TSX financial stock is trading well below its recent peak, but its long-term fundamentals remain rock solid.

Read more »

dividend growth for passive income
Bank Stocks

This Canadian Bank Pays 4.75% and Could Double Your Money by 2030

A Canadian bank is a top pick for its lucrative dividend and potential to double your money in five years.

Read more »

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

How I’d Invest $7,000 in My TFSA for $660 in Tax-Free Annual Income

Canadians looking for ways to make the most of the new TFSA contribution room should consider investing in these two…

Read more »

oil and natural gas
Energy Stocks

1 Magnificent Canadian Energy Stock Down 23% to Buy and Hold for Decades

This oil and gas producer has increased its dividend annually for more than two decades.

Read more »

Silhouette of bull in front of setting sun
Investing

Where I’d Invest $2,500 in the TSX Today

Given their solid underlying businesses and healthy growth prospects, I am bullish on these TSX stocks.

Read more »

path road success business
Dividend Stocks

How to Invest $50,000 of Tax-Free Cash as Canada-US Trade Uncertainty Escalates

Few Canadian stocks are as easy a choice as this one, making it perfect during volatile periods.

Read more »

Doctor talking to a patient in the corridor of a hospital.
Dividend Stocks

This Dividend King Paying 7.5% in Monthly Income Is a Must-Have

This high-yield TSX stock might not be a textbook Dividend King, but its reliable monthly payouts and improving financials make…

Read more »

monthly desk calendar
Dividend Stocks

How I’d Generate $200 in Monthly Income With a $7,000 Investment

Want to establish $200 in monthly income (or even more?) Here's an easy way to start today that will provide…

Read more »