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It’s been a treacherous past few months for the broader markets, with the TSX Index and S&P 500 sinking deeper into correction territory. Indeed, seasoned investors know that stock market corrections are not out of the ordinary.
Through one’s investment career, one can expect corrections to the tune of double digits. Indeed, a correction per year isn’t just something to fret or time the market over. At the end of the day, a correction is only healthy. I’d argue it’s far better to have Mr. Market have the occasional cathartic puke every year rather than hold it in until he finally gives in and makes investors really sick.
Stock market corrections happen. Don’t fear; get greedy instead!
Indeed, a 10% or so dip in markets feels very painful in the moment. Nobody wants to see their portfolio down by four or even five figures in a matter of weeks. Still, in the grander scheme of things, market corrections aren’t as detrimental to one’s retirement fund. The key is to stay the course and take advantage of opportunities to buy the dip as they arise.
Sure, that’s easier said than done. Going into November, it seems like buying shares of anything is a money-losing endeavour. Whether we’re talking about telecoms, utilities, or even defensive consumer staple stocks, there doesn’t seem to be a whole lot of shelter from the cool breeze of autumn 2023.
In any case, here are two stocks on my watchlist this November. Feel free to add one or more of them to your own as we head into year-end.
Shopify
First up, we have Canada’s shining tech star, which is back on the retreat once again, down over 10% in the past month and over 30% from its 52-week highs hit back in July 2023. Indeed, Shopify (TSX:SHOP) stock’s relief rally has ended in devastating fashion.
Blame central banks, rates, and the economic outlook, if you will. But Shopify remains one of the most innovative firms in the country. And I think it will innovate its way to greater growth, even if the landing for the Canadian economy proves harder than expected.
Shopify is an $82.6 billion tech titan that will rise once the macro picture improves again. The only question is whether investors are willing to brave the tough terrain lying ahead. If you’re young and growth-oriented, I’d argue SHOP stock is a name to watch on the way down.
As for a level I’d consider buying, I view a good level of support in the $58-60 range. If that level breaks, though, shares could be headed back to 2022 lows. Either way, Shopify stock’s a wonderful firm at the mercy of market moves right now. Don’t let that scare you to the sidelines!
National Bank of Canada
National Bank of Canada (TSX:NA) is a Canadian bank stock that’s under pressure, just like the rest of them. Shares are down around 18% from its 52-week high and around 19% from its all-time high hit back in late 2021. While it’s been quite the slide endured in recent months, National Bank has held its own far better than its Big Six peers. Indeed, some of the harder-hit ones are off by more than 40%.
Though National Bank may not seem like as good a bargain, I think it may very well be the best buy of the batch. Shares go for 9.2 times trailing price to earnings, which is ridiculously depressed. While the 4.77% dividend yield isn’t as bountiful as its more battered peers, I think it’s worth pursuing if you’re looking for the perfect mix of capital gains and dividends (total returns).
National Bank has outperformed its bigger brothers in recent years, and for good reason. The bank has exceptional risk managers and may be able to make up ground, even as the recession moves closer.
