As the S&P 500 moves deeper into correction territory, it’s a good idea to have a shopping list ready to take advantage of the first round of stock sales. When buying on such dips, it’s important not to use up your entire cash reserve at a single point in time, especially since stocks could become even cheaper in a few months from now if global markets move into bear market mode (+20% decline from peak), which, I’m sure you’d agree, we’re way overdue for.
The negative momentum could gain traction in the latter part of the year, but regardless, you should feel comfortable doing some buying right now. There’s no way to tell how much more value the market will shed before hitting the bottom. Spread your buying activity as stocks continue to fall, and instead of timing a bottom, and be on the lookout for quality companies with solid fundamentals that have been unfairly battered amid the turmoil.
If you’ve yet to create a correction shopping list, here are two ideas that you may want to keep an eye on as the volatile ride continues:
Great-West Lifeco Inc. (TSX:GWO)
Shares of Great-West are down ~11% over the past year, and with the company’s recent 6% dividend hike, investors now have the opportunity to lock in a fat 4.72% yield. For those looking for a way to benefit from the trend of rising interest rates, Great-West is a compelling buy, especially since you’re getting a dividend whose yield is over 1% higher than its Canadian competitors in the life insurance space.
The stock currently trades at a 10.8 forward price-to-earnings multiple, a 1.6 price-to-book multiple, a 0.7 price-to-sales multiple, and a 4.8 price-to-cash flow multiple, all of which are lower than the company’s five-year historical average multiples of 13.6, 1.9, 0.9, and 6.2, respectively.
Shares are really cheap right now, and although they could get cheaper, it’d be a wise move to at least get some skin in the game today, as the above-average dividend yield will surely dampen the volatility that’s likely on the horizon.
Rogers shares are down nearly 20% from 52-week highs in spite of strong subscriber growth numbers over the past year. New CEO Joe Natale is putting his foot down when it comes to “unfair practices,” which Rogers has been found guilty of in the past. The company is committed to improving its customer satisfaction to maintain loyalty and keep up positive subscriber-growth momentum in a more challenging Canadian telecom scene.
Of the Big Three incumbents, Rogers is my favourite pick right now, and I think the recent weakness in the stock is not indicative of how the business is actually faring. The broader basket of telecom stocks has sold off due to interest rate fears, opening a buying window for investors who’d like to bolster their portfolios with a more defensive position.
The stock trades at a 14.4 forward price-to-earnings multiple, a 4.6 price-to-book multiple, a 2.1 price-to-sales multiple, and a 7.4 price-to-cash flow multiple, all of which are lower or in line with the company’s five-year historical average multiples of 19.6, 5.0, 2.0, and 7.2, respectively.
Although the 3.41% dividend yield is below average for a telecom, I believe Rogers will provide the highest total return of all Big Three players because of its strong subscriber-growth numbers, which could continue to improve with seasoned veteran Joe Natale at the helm.
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Fool contributor Joey Frenette has no position in any of the stocks mentioned.