3 Attractive Value Plays for Long-Term Investors

Searching for a value play? If so, Canadian Pacific Railway Limited (TSX:CP)(NYSE:CP), IGM Financial Inc. (TSX:IGM), and Stantec Inc. (TSX:STN)(NYSE:STN) are very attractive options.

| More on:
The Motley Fool

As a value-conscious investor, I am always on the lookout for high-quality companies whose stocks are trading at discounted levels, and after a quick search of the market, I came across three very attractive options. Let’s take a quick look at each, so you can determine if you should buy one of them today.

1. Canadian Pacific Railway Limited

Canadian Pacific Railway Limited (TSX:CP)(NYSE:CP) is the second-largest rail network operator in Canada and one of the 10 largest in North America.

At today’s levels, its stock trades at just 15.4 times fiscal 2016’s estimated earnings per share of $11.15 and only 13.6 times fiscal 2017’s estimated earnings per share of $12.64, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 27 and its industry average multiple of 19.8.

In addition, Canadian Pacific pays a quarterly dividend of $0.35 per share, or $1.40 per share annually, which gives its stock a yield of about 0.8%. Investors should also note that it has maintained this annual dividend rate since 2013, but I think its very strong growth of free cash flow, including its 59.3% year-over-year increase to a record $1.16 billion in fiscal 2015, will allow it to announce a significant increase at some point in 2016.

2. IGM Financial Inc.

IGM Financial Inc. (TSX:IGM) is one of Canada’s largest personal financial services companies and one of the country’s largest managers and distributors of mutual funds and other managed asset products with approximately $129 billion in total assets under management.

At today’s levels, its stock trades at just 12.8 times fiscal 2016’s estimated earnings per share of $3.00 and only 12 times fiscal 2017’s estimated earnings per share of $3.19, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 14.5 and its industry average multiple of 38.8.

In addition, IGM pays a quarterly dividend of $0.5625 per share, or $2.25 per share annually, which gives its stock a yield of about 5.9%. Investors must also note that it has raised its annual dividend payment for two consecutive years, and I think its ample cash flows from operating activities, net of commissions paid, including $621.7 million in fiscal 2015, could allow it to announce another slight increase in 2016.

3. Stantec Inc.

Stantec Inc. (TSX:STN)(NYSE:STN) is one of the world’s leading providers of comprehensive professional services in the area of infrastructure and facilities, including planning, engineering, architecture, interior design, surveying, and environmental sciences.

At today’s levels, its stock trades at just 16.8 times fiscal 2016’s estimated earnings per share of $1.90 and only 14.7 times fiscal 2017’s estimated earnings per share of $2.17, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 59.4 and its industry average multiple of 20.9.

In addition, Stantec pays a quarterly dividend of $0.1125 per share, or $0.45 per share annually, which gives its stock a yield of about 1.4%. Investors must also note that it has raised its annual dividend payment for three consecutive years, and its 7.1% hike in February has it on pace for 2016 to mark the fourth consecutive year with an increase.

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 Joseph Solitro has no position in any stocks mentioned.

More on Investing

Canadian Dollars
Stock Market

Where to Invest $5,000 in April 2024

Do you have some extra cash to spare? Here are five companies to invest $5,000 in next month.

Read more »

Plane on runway, aircraft
Stocks for Beginners

Up 53% From its 52-Week Low, Is Cargojet Stock Still a Buy?

Cargojet (TSX:CJT) stock is up a whopping 53%, nearing closer to 52-week highs from 52-week lows, so what's next for…

Read more »

Question marks in a pile
Bank Stocks

Should You Buy Canadian Western Bank for its 4.8% Dividend Yield?

Down 35% from all-time highs, Canadian Western Bank offers a tasty dividend yield of 4.8%. Is the TSX bank stock…

Read more »

Gold bars
Metals and Mining Stocks

Why Alamos Gold Jumped 7% on Wednesday

Alamos (TSX:AGI) stock and Argonaut Gold (TSX:AR) surged after the companies announced a friendly acquisition for $325 million.

Read more »

tsx today
Stock Market

TSX Today: Why Record-Breaking Rally Could Extend on Thursday, March 28

The main TSX index closed above the 22,000 level for the first time yesterday and remains on track to post…

Read more »

Nuclear power station cooling tower
Metals and Mining Stocks

If You’d Invested $1,000 in Cameco Stock 5 Years Ago, This Is How Much You’d Have Now

Cameco (TSX:CCO) stock still looks undervalued, despite a 258% rally. Can the uranium miner deliver more capital gains to shareholders?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Growth Stocks I’m Buying in April

These three growth stocks are up in the last year, and that is likely to continue on as we keep…

Read more »