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The Alternative Way to Look at Any Recession

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Written by Demetris Afxentiou at The Motley Fool Canada

The market hasn’t exactly been stellar in 2022. So far, the post-COVID rally has puttered to a complete stop. Instead, the market has dropped over 11% year to date. The prospect of that correction shifting into a full-blown recession has some investors on edge. Fortunately, there’s an alternative way to look at any recession, and it’s not so bad.

The alternative way to look at a recession is better

Let’s take a moment to think about a recession from a different lens. Markets occasionally retreating is, unfortunately, part of the natural flow of the market. It’s what we do when the market is down that is important.

Market corrections and even recessions provide investors with incredible opportunities to invest in highly discounted stocks that would otherwise be priced much higher.

Two examples of this in the current market landscape are Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and Shopify (TSX:SHOP)(NYSE:SHOP).

Scotiabank is one of Canada’s big banks. In a rare break from its peers that focused on the U.S. market, Scotiabank focused its international efforts on Latin America. Specifically, Scotiabank targeted nations of the Pacific Alliance: Mexico, Columbia, Chile, and Peru.

Establishing a solid branch network in those markets has helped Scotiabank become a preferred lender throughout the region. It’s also helped to propel its international segment to new highs.

As of the time of writing, Bank of Nova Scotia is down by 14% year to date.

Turning to income, Scotiabank boats a juicy quarterly dividend that carries a yield of 5.14%. That welcome income stream makes Scotiabank a great alternative way to look at any recession.

Shopping time!

Shopify is another intriguing option to consider. The e-commerce behemoth surged under the pandemic, as consumers turned to online storefronts in place of physical stores. Now that markets are reopening, Shopify stock has reset to levels not seen since before the pandemic started.

So far, the stock has dropped a whopping 74% year to date. Also contributing to that dip are rising costs, interest rate hikes, and concerns over a potential recession.

Despite those genuine concerns, long-term investors should note that Shopify remains a stellar option to consider as a long-term investment. In fact, the long-term potential of the stock is still immense. This is definitely a stock to buy now as an alternative way to look at any recession for long-term gains.

Final thoughts

All investments carry some risk. That includes both Scotiabank and Shopify. Fortunately, both stocks offer great long-term potential that extends well beyond the current downturn. In my opinion, one or both of these stocks should be part of a well-diversified, long-term portfolio.

The post The Alternative Way to Look at Any Recession appeared first on The Motley Fool Canada.

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Fool contributor Demetris Afxentiou has positions in The Bank of Nova Scotia. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends BANK OF NOVA SCOTIA.


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