3 Stock Picks for Value-Obsessed Investors

Does your portfolio lack value? If so, Power Financial Corp. (TSX:PWF), Fortis Inc. (TSX:FTS), and Macdonald Dettwiler & Associates Ltd. (TSX:MDA) can alleviate that problem.

The Motley Fool

One aspect of investing most of us can agree on is that it’s not always easy finding the right stock at the right price when we are ready to buy. Well, to make things easier for those of you who are looking to make a purchase today, I’ve scoured the market and compiled a list of three undervalued stocks from different industries, so let’s take a quick look at each to find out which would fit best in your portfolio.

1. Power Financial Corp.

Power Financial Corp. (TSX:PWF) is a diversified management and holding company with interests in companies in the financial services industries across the world, and its holdings include a 67.4% ownership stake in Great-West Lifeco Inc. and a 60.1% ownership stake in IGM Financial Inc.

At today’s levels, its stock trades at just 9.9 times fiscal 2016’s estimated earnings per share of $3.23 and only 9.1 times fiscal 2017’s estimated earnings per share of $3.52, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 11.9 and its industry average multiple of 20.4.

In addition, Power Financial pays a quarterly dividend of $0.3925 per share, or $1.57 per share annually, which gives its stock a yield of about 4.9%. It is also important to note that the company’s 5.4% dividend hike on March 23 has it on pace for fiscal 2016 to mark the second consecutive year in which it has raised its annual dividend payment.

2. Fortis Inc.

Fortis Inc. (TSX: FTS) is one of the largest electric and gas utilities companies in North America, and upon completion of its deal to acquire ITC Holdings Corp., it will become the largest independent electric transmission company in the United States.

At today’s levels, its stock trades at just 18.3 times fiscal 2016’s estimated earnings per share of $2.16 and only 16.1 times fiscal 2017’s estimated earnings per share of $2.46, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 20.2 and its industry average multiple of 20.8.

In addition, Fortis pays a quarterly dividend of $0.375 per share, or $1.50 per share annually, which gives its stock a yield of about 3.8%. It is also important to note that the company’s 10.3% dividend hike in September 2015 has it on pace for fiscal 2016 to mark the 43rd consecutive year in which it has raised its annual dividend payment.

3. Macdonald Dettwiler & Associates Ltd.

Macdonald Dettwiler & Associates Ltd. (TSX: MDA) is a global communications, surveillance, and intelligence company, providing operational solutions to commercial and government organizations worldwide.

At today’s levels, its stock trades at just 13.3 times fiscal 2016’s estimated earnings per share of $6.33 and only 12.1 times fiscal 2017’s estimated earnings per share of $6.94, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 28.6 and its industry average multiple of 25.4.

In addition, Macdonald Dettwiler pays a quarterly dividend of $0.37 per share, or $1.48 per share annually, which gives its stock a yield of about 1.8%. Investors should also note that the company raised its annual dividend payment by 13.8% to its current rate of $1.48 per share in fiscal 2015, and I think its increased amount of cash provided by operations, including its 31.6% year-over-year increase to $321.3 million in fiscal 2015, could allow it to announce another dividend hike at some point in 2016.

Fool contributor Joseph Solitro has no position in any stocks mentioned.

More on Investing

An investor uses a tablet
Bank Stocks

Brokerage Account Basics: What Canadian Beginners Should Look For

New to investing in Canada? Learn to compare brokerage fees, pick a TFSA, RRSP or FHSA, and see why Royal…

Read more »

Metals
Energy Stocks

What Happens Next After Ottawa’s Deadline for Stelco

Stelco's owner has defended its layoffs, but Ottawa's deadline doesn't automatically settle the jobs dispute or the investment case.

Read more »

Safety helmets and gloves hang from a rack on a mining site.
Stocks for Beginners

Canada Lost 68,000 Jobs in September: The October 28 Rate Call Just Got Harder

September's job losses complicate the rate decision, while Scotiabank shows why borrowers' relief and bank earnings aren't the same thing.

Read more »

Canadian energy stocks are rising with oil prices
Energy Stocks

Diesel Is Running Short Worldwide: The Canadian Refiner Cashing In

Suncor's refining margins show how tight fuel supplies can support cash, while a modest dividend yield keeps expectations realistic.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

How I’d Structure My $14,000 TFSA for Constant Income

If you have $14,000 saved in your TFSA, here is one easy investment strategy to earn $50 of tax-free monthly…

Read more »

telehealth stocks
Tech Stocks

1 Canadian Stock Down 42% to Buy and Hold Forever

This health tech stock is trading at a discount as it continues to grow and expand a business very much…

Read more »

woman looks at iPhone
Dividend Stocks

I’m Not Selling Telus After the 55% Dividend Cut: Here’s Why

Contrary to what the market seems to be saying, Telus Corporation (TSX: T) still has a lot going for it.…

Read more »

monthly calendar with clock
Dividend Stocks

A No-Nonsense 3.7% Dividend Stock That Can Pay Retirees Monthly

This no-nonsense dividend stock has returned more than $3.4 billion to shareholders through dividends since 2013.

Read more »