2 Stocks I Want to Buy But Won’t (Yet)

Not all stocks are great buys. Here are two stocks I want to buy that have long-term potential, but I won’t — at least yet.

| More on:
think thought consider

Image source: Getty Images

The volatile market we’ve seen in 2022 has exposed some superb discounts on great stocks. It’s also brought down the price on a number of other stocks that are a little riskier. Some of those riskier stocks I want to buy but won’t just yet.

Here’s a look at those stocks and why I won’t be buying them just yet.

Stock #1: Air Canada

Air Canada (TSX:AC) really is a unique company for this list of stocks I want to buy but won’t. On one hand, Air Canada excels at turning itself around. In the decade prior to the pandemic, it was one of the best (if not the best) performing stocks on the market.

Specifically, the company has experienced management that knows when and where to grow and what needs to be cut if it comes down to it.

Now that the pandemic is coming to an end, many see it as Air Canada’s time to return to growth. So far in 2022, the airline is down nearly 20%. This brings the stock price nearly down to its pandemic lows.

Fortunately, the market is improving, passengers are traveling, and many of the COVID-era lockdowns and measures have been lifted.

So, why not buy Air Canada?

In short, the stock is too risky. Yes, the market is recovering. Yes, people are traveling. But there are three other points to mention.

First, interest rates are rising fast, and airline stocks are heavily reliant on borrowing. At best, this will slow Air Canada’s recovery. At worst, it will stop it entirely.

Second, inflation is taking a chunk out of the discretionary income people have for travel. This may not be evident right now from the number of people traveling through airports, but it will begin to impact travel over the next few months. For Air Canada, this potentially means a slower-than-expected recovery of its revenue stream.

Finally, there’s COVID itself. Restrictions are mostly gone, but we’re also heading into the prime period of the year where infection rates rise, and new variants emerge.

In short, it’s a risk game, and, in my opinion, Air Canada is far too risky right now.

Stock #2: Cineplex

I really want Cineplex (TSX:CGX) to recover and return to profitability. I also want it to restore the juicy income it once offered. Unfortunately, the return to those days may be further off than most expect.

Cineplex had problems well before the pandemic forced Canada’s largest entertainment company to temporarily shutter its doors. The growing popularity of the streaming model has chipped away at Cineplex’s business for years.

During the pandemic, the streaming model went into overdrive. Multiple studios launched their own streaming service, with monthly subscription pricing far below the price of a single admission ticket. Factor in the added convenience of streaming from anywhere and the nearly unlimited amount of content, and you have a problem for Cineplex.

Cineplex’s movie-and-popcorn business isn’t the company’s only business segment, but it is responsible for the bulk of the company’s revenue. Initiatives such as the Rec Room and digital media business are diversifying that revenue stream, but not fast enough.

Within the theatres, concessions, better seating, and a more unique experience are attempts to drive customers back into theatres. A star-studded list of summer blockbuster releases will help attendance numbers this quarter, but that could change, and very quickly.

This is particularly true if there’s a resumption in COVID cases during the fall.

In short, Cineplex has huge potential, but it’s still weighed down by plenty of short-term risk.

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 Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool recommends CINEPLEX INC.

More on Stocks for Beginners

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

How to Use Your TFSA to Earn Ultimate Passive Income

If you have a TFSA, then you have the key to creating ultimate passive income. All you need is a…

Read more »

Hourglass and stock price chart
Dividend Stocks

Goeasy Stock: Is It Heading for a 52-Week High?

Goeasy stock has been edging higher, especially after another record-setting earnings report. So are 52-week highs in sight?

Read more »

bulb idea thinking
Stocks for Beginners

2 Stocks That Could Help You Get Richer in 2025

It’s time to prepare for 2025 before you leave for the holidays. Here are two stocks that could make you richer…

Read more »

Middle aged man drinks coffee
Stocks for Beginners

The Best Investment Hack Every Investor Should Know

An investment hack doesn't have to be risky, tricky, or any of those scary ideas. In fact, it can be…

Read more »

Investor reading the newspaper
Stocks for Beginners

A Better Post-Earnings Buy: Restaurant Brands or Lightspeed?

These two retail stocks have come out with earnings, but which is the clear long-term winner for investors?

Read more »

a person watches a downward arrow crash through the floor
Dividend Stocks

3 Everyday CRA Red Flags Investors Should Really Know

The CRA can be a blessing and a curse, but if you make sure to follow the rules and not…

Read more »

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Canadian National Railway Stock is on Sale: Why Now is the Time to Invest

CNR stock has long been a top stock, with a solid position in a railway duopoly. But right now is…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

This 7.9% Dividend Stock Pays Cash Every Month

We all want dividends, and having them come out monthly is ideal! But this might be a strong choice for…

Read more »