Want to get rich? The wealth that comes instantly also goes instantly. Thus, the right way to grow rich is to grow your wealth gradually year after year by reinvesting your money in diverse stocks and investment instruments. Now, there are multiple ways to build wealth.
You could invest in long-term stocks, where you buy and hold forever, or take advantage of the greater fool’s theory. The theory revolves around the fact that investors can sell an overvalued stock at a higher price if they find a greater fool willing to buy the asset at an inflated price. Both methods can help you grow your wealth in 2024.
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Three stocks that could make you richer in 2024
This year’s expectation is a mild recession in mid-2024, followed by an economic recovery in the latter half. However, stock market momentum will be influenced by the Bank of Canada’s decision around interest rate cuts. You can use this expectation to your advantage and grow your wealth with the below three stocks.
Air Canada
I turned bullish on Air Canada (TSX:AC) when the airline turned profitable last year and significantly reduced its net debt by $3 billion. Despite the improving fundamentals, the airline stock trades near its pandemic levels below $18. Why so? The stock price reflects investors’ sentiments around the company’s future earnings potential.
Air Canada is currently facing rising salary expenses as it hikes wages and adds more staff. Salary is the second largest expense after fuel. The airline managed to turn profitable in 2023 even when fuel expenses were high, by passing on the cost to customers. It might do the same for salary as fuel expenses have eased.
Air Canada stock could see a seasonal rally during the summer when leisure travel peaks. However, the stock price may be range bound ($18–$24) as the airline diluted its equity by issuing a significant number of new shares in 2020–2021 to raise capital. Until the airline makes any windfall gains or share buybacks, the stock’s long-term growth would be restricted.
You could use the greater fool theory here and buy the stock below $18 and sell it closer to $23, growing your wealth by 25–28%.
BlackBerry stock
BlackBerry (TSX:BB) stock is trading at its 20-year low as long-term shareholders were concerned that Fairfax Holdings will increase its stake in BlackBerry. It is a pivotal time for BlackBerry as it is on the brink of realizing its $640 million QNX royalty revenue backlog, piling up for four years due to industry headwinds.
The company’s new CEO is restructuring the cybersecurity business to improve efficiency. He hopes to turn the company profitable in the next two years. If the turnaround succeeds, BlackBerry stock can grow multiplefold. And if it doesn’t succeed, the management could consider selling the company or part of the company to competitors. BlackBerry’s technology portfolio of endpoint security, the QNX operating system, and IVY platform could attract buyers. If any acquisition happens, the stock could surge significantly.
In any scenario, BlackBerry stock can make you richer in 2024, or maybe 2025.
Nuvei stock
While the above two stocks are trading at their bottom, the stock of payments platform Nuvei (TSX:NVEI) is trading 86% above its bottom price. Despite this recovery, it is down 25% from its IPO price. The decline is because the stock is still overcoming the after-effects of the short sale by Spruce Point Capital. Nuvei is past these headwinds and moving towards scaling its business organically and through acquisitions.
Its Paya acquisition last year opened the platform to under-penetrated verticals of business-to-business, healthcare, government, and non-profit. They will help Nuvei generate stable cash flow. Nuvei also acquired Till Payments in January this year.
While Nuvei funds acquisitions with debt and equity, it also keeps repaying debt and repurchasing shares to avoid equity dilution. Apart from acquisitions, Nuvei enjoys high payment volumes during the festive season that convert into higher revenue.
The stock could surge in 2024 as it realizes the synergies of the Paya acquisition this year, and crypto sees a revival.
