SLAM Exploration Ltd. (TSXV: SXL)
‘Exploring for critical elements and precious metals in New Brunswick, Canada.’
Chasing stocks with strong momentum can be a rather dangerous strategy, especially when investors pay less attention to entry prices—where the value of the stock matters most—and the state of fundamentals. Of course, the temptation to buy simply because a stock has been consistently rising recently is certainly present. However, neglecting the purchase price can be a source of losses, which may occur not only in the short term but could even extend into the long run.
Undoubtedly, it is never wise to disregard the risks investors need to take on, even for young growth-oriented investors who can withstand additional volatility when dealing with these high-momentum, volatile hot stocks. As the investment master Warren Buffett said, merely watching stock price fluctuations does not equate to investing.
Therefore, investors should be particularly cautious with stocks that are overheated, overbought, and potentially overvalued. These stocks are likely to peak and decline soon after you hit the buy button, even if you expect their momentum to bring more upward drive. This article will focus on two red-hot Canadian stocks that actually have rapidly improving growth prospects and may still be attractively priced when growth is balanced against valuation.
Barrick Gold (GOLD) has been one of the hottest stocks in the entire market over the past year, with its share price more than doubling in a year and posting a year-to-date gain of 16%. Although just over three weeks into the new year, Barrick Gold’s share price increase has already made many investors feel ecstatic enough for an entire year.
As geopolitical uncertainty intensifies and the price of gold approaches the $5,000 per ounce mark, it’s no surprise that Barrick Gold’s stock has entered an accelerated rally mode. Last Friday, the stock rose another 3%, partly benefiting from the surge in gold prices and the potentially accelerating so-called “currency debasement” trade. With the appointment of new CFO Helen Cai and strong upward momentum, Barrick Gold seems unstoppable. However, investors should remain vigilant, as volatility could spike at any time.
Kinross Gold (KGC) has been another big winner over the past year, with its stock price rising 237% in the past year and 31% year-to-date. As a smaller miner (with a market cap of $62 billion), its higher upside potential was expected.
Despite its high beta of 1.2, indicating a stronger correlation with the rest of the market, I still believe the stock has strong momentum, with its price rising even faster. At some point, a pullback will occur. It might be advisable to start buying very slowly or wait for pullback opportunities between now and mid-2026.
