GARP Investors: Only 1 of These Popular Canadian Stocks Is a Buy

Lassonde Industries Inc. (TSX:LAS.A) and two other popular Canadian stocks get their fundamentals picked over. Are any of them a buy?

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Have a quick look for Canadian stocks on your favourite search engine, and you’ll find the usual mix of financials, mining stocks, weed stocks, and so on. But three stocks I’ve noticed that often get pushed to the top of an internet search don’t seem to get a lot of press.

A drinks manufacturer, a packing and tissue producer, and a financial and industrial management and holdings company make for an unlikely trio of stocks, with some interesting surprises in store. Let’s see whether any of these high-ranking stocks are a buy today based on a combination of growth and value.

Lassonde Industries (TSX:LAS.A)

A producer of fruit and veg drinks in Canada and internationally, Lassonde is perhaps better known for its brands, such as Del Monte, Oasis, Rougemont, Allen’s, Canton, Dublin’s Pub, and other familiar names.

Discounted by 3% compared to its future cash flow value, Lassonde’s multiples speak to an appreciating stock popular with fans of capital gains. A P/E of 20.3 times earnings plus a high P/B of 3.1 times book underline this, though a 4.1% expected annual growth in earnings suggests that any upside may be limited. A dividend yield of 1.22% doesn’t quite qualify Lassonde as one for your TFSA, and its 15% return on equity last year would confirm this.

Looking at Lassonde’s share price over the last five years, we can see a general upward momentum that doesn’t look set to reverse any time soon. This looks like the kind of stock that will just keep appreciating. It’s on a bit of a dip since last week, offering an opportunity. Overall, it scores well on momentum, but not so well on value.

Cascades (TSX:CAS)

A producer of packaging and tissue products made mostly from recycled fibres in Canada and internationally, Cascades is discounted at the time of writing by 43% compared to its future cash flow value. Its multiples look good: a low P/E of 2.9 times earnings and P/B of 0.8 times book are certainly nothing to sniff at. However, a 62.3% expected contraction in earnings over the next one to three years leaves something to be desired.

A dividend yield of 1.28% and last year’s return on equity of 26% suggest that shareholders are looked after to some extent, although this does not seem like enough of an incentive to buy this currently depreciating stock.

Power Financial (TSX:PWF)

Power Financial is a well-diversified international management and holding company that holds a range of financial services interests around the world as well as holdings in worldwide industrial and services entities headquartered in Europe. Its P/E of 12 times earnings, PEG of 0.5 times growth, and P/B of 1.2 times book all look great. So too do its 26.2% expected annual growth in earnings and excellent dividend yield of 5.68%.

Looking at share prices since 2014, this stock has wavered within the $29-37 bracket pretty consistently. Its five-year volatility relative to the market of 0.95 backs this up, meaning that this stock scores low on momentum, but high on value. Coupled with decent growth, this is a good pick for growth at reasonable price (GARP) investors.

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 Victoria Hetherington has no position in any of the stocks mentioned.

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