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.

| More on:
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.

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

Retirement
Investing

From Comfortable to Luxurious: Amplify Your Retirement Lifestyle With TFSA Income

Dividend-growth stocks can supercharge your TFSA.

Read more »

A tractor harvests lentils.
Dividend Stocks

Why Nutrien Stock Is Still a Great Buy on the TSX Today

Nutrien (TSX:NTR) stock has gone through major ups and downs thanks to outside influences, but its bottom line remains incredibly…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Tech Stocks

Secure Your TFSA for Retirement: Top Stocks to Invest in Now

Here's how you can diversify your TFSA portfolio and hold quality stocks across multiple sectors, lowering overall risk.

Read more »

Businessperson's Hand Putting Coin In Piggybank
Dividend Stocks

Build Your Retirement Fortune With These Top TFSA Stocks

Here are two top Canadian dividend stocks you can add to your TFSA to build wealth for retirement.

Read more »

Path to retirement
Dividend Stocks

Invest in These Stocks for a Worry-free Retirement Income Stream

Are you looking for an income stream that can pay you throughout your retirement? Then invest a portion of your…

Read more »

Male IT Specialist Holds Laptop and Discusses Work with Female Server Technician. They're Standing in Data Center, Rack Server Cabinet with Cloud Server Icon and Visualization
Tech Stocks

Could This Undervalued AI Company Be Canada’s Next Big Thing?

Open Text (TSX:OTEX) stock could be the next tech stock to surge from its use of artificial intelligence, making it…

Read more »

TELECOM TOWERS
Dividend Stocks

Is BCE Stock Still a Top Telecom Investment in Canada?

Canada’s telecoms can provide growth and income in a defensive shell. Let’s see if BCE is still a top telecom…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

2 Canadian Dividend Stocks I’ll Be Buying Hand Over Fist in June 2023

These two beaten-down Canadian dividend stocks could help you earn handsome returns on your investment in the long term if…

Read more »