2 Value Stocks Near 52-Week Lows Worth Buying

Why AutoCanada Inc. (TSX:ACQ) and Potash Corp./Saskatchewan Inc. (TSX:POT)(NYSE:POT) look attractive at current prices.

| More on:
The Motley Fool

A stock usually hits 52-week lows for a good reason, like weakening growth prospects or troubles brewing within the company. But more often than not, the market overreacts to negative news and sends a stock tumbling. That’s when you need to go bottom fishing and look for beaten-down stocks that hold promise. Two such stocks that look attractive now are AutoCanada Inc. (TSX:ACQ) and Potash Corp./Saskatchewan Inc. (TSX:POT)(NYSE:POT).

AutoCanada: a winner in the making

AutoCanada has had tremendous growth in recent times, with revenue in 2014 surging 57% backed by 9% growth in same-store sales. Its net income climbed nearly 40% last year. Much of the growth can be attributed to the premium auto brands that the company added to its dealership portfolio over the past couple of years, including Audi, Chevrolet, Cadillac, and BMW.

Bank of Nova Scotia’s just-released report, On the Road to Record Global Car Sales in 2015, projects record car sales in Canada this year, and near-15-year high unit-sales volumes in the U.S. As the largest automotive dealership company in Canada, AutoCanada is poised to benefit from the ongoing strength in auto markets.

Trading at under 14 times trailing earnings and just about 10.7 times forward earnings, AutoCanada represents a great entry point for long-term investors right now.

Potash Corp.: a solid opportunity

I believe a company that deals in an essential product is a potential long-term winner. Case in point: fertilizer manufacturer, Potash Corp.

As providers of essential nutrients to soil that boost crop productivity, fertilizers could play an essential role in addressing the world’s challenge of growing enough food to feed a rapidly rising population. Potash Corp. is the global leader in fertilizers, dealing in all three essential nutrients—potash, nitrogen, and phosphate.

Potash Corp. has been in the headlines lately after it unsuccessfully bid for German potash producer K+S in June. Potash Corp. continues to pursue K+S and the deal has fair chances of going through if Potash raises its bid. If successful, Potash Corp.’s global market share could cross 30%.

Otherwise, Potash Corp. has already laid down the foundation for a strong future as it nears completion of its multi-billion dollar expansion program. With capital expenditures projected to decline, the company will have more free cash flow to invest in growth via acquisitions and return to shareholders in coming years.

Thanks to dividend growth of more than 11 times since 2007 and the recent slide in stock price, Potash Corp. today yields a solid 5.6%. At today’s price, Potash Corp. is an opportunity for both value and dividend investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Neha Chamaria has no position in any stocks mentioned.

More on Investing

A cannabis plant grows.
Cannabis Stocks

Canopy Growth Stock Is Rising But I’m Worried About This One Thing

Canopy Growth stock is soaring as the legalization effort makes real progress in both Germany and the United States.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Investing

3 Roaring Stocks to Hold for the Next 20 Years

These top TSX stocks are excellent long-term buys, given their multi-year growth potential and solid underlying businesses.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

grow dividends
Investing

Here’s My Top 3 TSX Stocks to Buy Right Now

Even though the TSX has been rising, there are still some good bargains out there. Here are three top compounding…

Read more »

Target. Stand out from the crowd
Investing

Prediction: This Canadian Growth Stock Could Double by 2030

Alimentation Couche-Tard (TSX:ATD) is a top growth stock that could do well over the next six or so years.

Read more »

Businessman holding AI cloud
Tech Stocks

Could Investing $20,000 in Nvidia Make You a Millionaire?

Nvidia stock has made investors millionaires in the last 10 years. Is it too late to invest to become a…

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

money cash dividends
Stocks for Beginners

Have $500? 3 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now

If you're looking for cheap stocks, these three have a huge future ahead of them, all while costing far less…

Read more »