3 Stocks for the Value-Obsessed Investor

Looking for a value play? If so, Toronto-Dominion Bank (TSX:TD)(NYSE:TD), Industrial Alliance Insur. & Fin. Ser. (TSX:IAG), and Stantec Inc. (TSX:STN)(NYSE:STN) are prime options.

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As value-obsessed investors, we are always on the lookout for high-quality companies whose stocks are trading at discounts compared with their recent averages. Well, I have scoured the market and found three prime investment options from three different industries, so let’s take a quick look at each to determine if you should buy one of them today.

1. Toronto-Dominion Bank

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is the largest bank in Canada with approximately $1.1 trillion in total assets.

At today’s levels, its stock trades at just 11.9 times fiscal 2015’s estimated earnings per share of $4.59 and only 11.3 times fiscal 2016’s estimated earnings per share of $4.83, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 13.2 and its industry average multiple of 12.9.

I think TD Bank’s stock could consistently trade at a fair multiple of at least 13, which would place its shares upwards of $62 by the conclusion of fiscal 2016, representing upside of more than 13% from current levels.

In addition, the company pays a quarterly dividend of $0.51 per share, or $2.04 per share annually, giving its stock a 3.75% yield.

2. Industrial Alliance Insurance and Financial Services Inc.

Industrial Alliance Insur. & Fin. Ser. (TSX:IAG) is one of the largest providers of life and health insurance products in Canada.

At current levels, its stock trades at just 11.7 times fiscal 2015’s estimated earnings per share of $3.63 and only 9.8 times fiscal 2016’s estimated earnings per share of $4.34, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 14.7 and its industry average multiple of 24.3.

I think Industrial Alliance’s stock could consistently trade at a fair multiple of at least 12, which would place its shares upwards of $52 by the conclusion of fiscal 2016, representing upside of more than 22% from current levels.

Additionally, the company pays a quarterly dividend of $0.30 per share, or $1.20 per share annually, giving its stock a 2.8% yield.

3. Stantec Inc.

Stantec Inc. (TSX:STN)(NYSE:STN) is one of the world’s leading providers of architectural, engineering, and environmental services.

At today’s levels, its stock trades at just 18.4 times fiscal 2015’s estimated earnings per share of $1.83 and only 16 times fiscal 2016’s estimated earnings per share of $2.11, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 59.9 and its industry average multiple of 25.3.

I think Stantec’s stock could consistently trade at a fair multiple of at least 20, which would place its shares upwards of $42 by the conclusion of fiscal 2016, representing upside of more than 24% from current levels.

Also, the company pays a quarterly dividend of $0.105 per share, or $0.42 per share annually, giving its stock a 1.2% yield.

Does your portfolio need more value?

Toronto-Dominion Bank, Industrial Alliance, and Stantec are three of the top value plays in their respective industries. All Foolish investors should strongly consider beginning to scale in to long-term positions in at least one of them today.

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.

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