Ask any contrarian about investing in stocks and you’ll pretty much get the same answer: buying stocks that are already doing very well warrants limited returns. Very limited. If you’re lucky, you might get the occasional high profit, but more often than not, returns are stale, limited, and not at all life-changing.
Take for example Bitcoin, a cryptocurrency that has investors scrambling for every last piece of it, eventually reaching record-high prices before skyrocketing downwards in the greatest plot twist of the entire investment history. These same investors are now looking for other options, and those that have not given up on the digital coins are hoping for some sort of bull run.
Follow a contrarian, however, and you’ll be encouraged to take a look at stocks that look hopeless, at least, for the time being. And what better example than Canadian oil and gas stocks?
In fact, Western Canada Select prices remain very low as compared to that of U.S. soil. This is despite oil prices performing much stronger than it did a year ago.
But there’s value to be had in taking risks, knowing that you may very well be looking at a jackpot once the tide changes for the better. In fact, take famous investor and billionaire Charlie Munger’s word for it: Have faith in your investments, even when they seem hopeless at the start.
Convinced? Well then, here are two Canadian stocks that are potential winners in the near future:
Cenovus Energy Inc. (OTCMKTS:CVE)
Formed in 2009, Cenovus is an integrated oil company headquartered in Calgary, Alberta. Headed by its CEO Alex Pourbaix, the company’s stocks have recently dropped below $10 this week, edging ever closer to the all-time low the company hit a year ago. But there’s good news to be had, as investors who buy today will get a good discount since the stock is still trading well below its book value.
The downside? The company wasn’t able to profit four out of its last five quarters, though it was still able to generate a free cash flow.
Overall, investing in the company at the moment poses many risks, although, knowing that Cenovus is one of Canada’s top companies in its sector, the payoff might be really great once things turn around. And it may very well be a strategic move on their part.
Enbridge Inc. (OTCMKTS:ENB)
Perhaps the better of the two options, Enbridge is a Calgary-based Canadian multinational energy transportation company.
At first glance, it’s definitely better than the former, as the company has done very well in the industry despite the downturn, seeing as its top line has increased by 35 percent since 2013.
However, it too, faces some problems, mainly with pipelines being either stalled or rejected, and its industry receiving a 10 percent decline in the stock. Through the years, Enbridge’s moderately priced stocks have always been a good buy, although the problem comes with investors usually avoiding this sector.
Moving forward, the sector poses many risks for the budding investor, but then again, fortune favors the bold, and whether it will apply to this industry is, as of now, still a big question mark.