Investors often buy the popular names they see discussed on their favourite business program, but there is also value to be found among some of the less-obvious picks.

Let’s take a look at WestJet Airlines Ltd. (TSX:WJA) and Inter Pipeline Ltd. (TSX:IPL) to see why they deserve a closer look right now.


WestJet has endured some turbulence over the past 18 months, but the airline looks like it might be getting back on track.

The June load factor just came in at a record 80.4%, up 3.5% over the same period last year. Traffic jumped 12.3% and capacity increased 7.5%.

For the first half of 2016, the load factor was 81.5%, up 1.6 points; traffic rose 7% and capacity is up 9% compared with 2015.

WestJet has taken some flak for expanding capacity too aggressively in a tough market, but management is boosting its forecast for revenue per available seat mile (RASM)–a metric widely used by analysts to determine an airline’s efficiency.

RASM is now expected to be down 5.5-6% for Q2 as opposed to the previous guidance of a 7.5-9.5% slide.

WestJet isn’t often cited as a dividend-growth stock, but the company has quietly raised the payout from $0.05 per share to $0.14 per share over the past five years. The current distribution offers a yield of 2.6%.

Extra baggage fees are now the norm and likely to stay in place. Fuel costs are manageable, and airlines have strong bargaining positions with manufacturers, so the medium-term outlook for the stock is improving.

And the Brexit might turn out to be a boon for business as the weak pound could spur demand for flights to the U.K.

WestJet has bounced nicely off the February low, but the shares still trade significantly below the late 2014 high.

I think the downside risk should be limited at this point and the stock could pick up a nice tailwind if passenger numbers continue to improve.

Inter Pipeline

Inter Pipeline is often overshadowed by its larger peers, but the stock offers a diversified revenue mix that is helping the company navigate through the energy downturn.

Inter Pipeline transports 15% of western Canadian conventional oil production and 35% of the country’s oil sands output. The addition of new assets is helping push throughput higher in both segments as customers continue to produce at a healthy clip despite the difficult market conditions.

Inter Pipeline also operates a growing liquids storage business in Europe. The division is enjoying strong demand with utilization rates hitting 98% in the first quarter. Added capacity through acquisitions and organic growth drove Q1 2016 funds from operations in Europe up 53% compared with the same period in 2015.

The stock pays a monthly dividend of $0.13 per share for a yield of 5.7%. With the payout ratio at 75%, the distribution looks safe, and investors could see another increase next year as new assets come online.

Bargain hunters swooped in when Inter Pipeline dropped below $20 per share in January and have since driven the shares 40% higher. As a result, the fire sale is over, but more upside should be on the way as the energy sector recovers.

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Fool contributor Andrew Walker has no position in any stocks mentioned.