Finding good value on the stock market is a challenge these days, but there still are some good opportunities out there for investors to get good value for their money. Some of the things that I look at when trying to find a good value stock is to look at ratios like price to earnings and price to book value in addition to qualitative factors like the moat that a company possesses.
A stock that trades at a good price and that has a strong position in its industry can provide you with a great opportunity to earn a strong return over the long term. Below are three stocks that meet these criteria and that I’d consider buying today.
Magna International Inc. (TSX:MG)(NYSE:MGA) has seen its share price tumble lately as concerns over NAFTA and auto tariffs have made investors a bit hesitant to invest in what is an otherwise very solid stock. For all the progress that Magna has made toward developing self-driving technology, the stock just hasn’t gotten the same hype that others in the industry have received.
In the past three months, Magna’s stock has declined by 15% and it trades around eight times earnings and less than twice its book value. The expertise that the company has developed along with a partnership with Lyft gives Magna a big advantage in the industry and positions the company well for growth down the road.
While there are concerns about free trade and tariffs, I’m skeptical about the long-term impact that decisions south of the border will have on Canadian companies, especially as we could very well see a change in power at the next election, when a lot of the obstacles that are present today could be removed.
Canfor Corporation (TSX:CFP) is another stock that had the potential to be hit hard by tariffs, but it hasn’t had the devastating impact that many were worried about. Instead, the stock price has risen by more than 35% in the past 12 months. New housing and renovations create a lot of demand for lumber, which in turn generates sales for Canfor.
In its most recent quarter, Canfor sales were up by more than 23%. Like Magna, Canfor trades at a very modest eight times earnings and is also at less than twice its book value. As one of the leaders in its industry, Canfor has a bright future and many opportunities to continue to grow.
Bank of Montreal (TSX:BMO)(NYSE:BMO) may not be the most popular of the big bank stocks, but that’s also why it’s an appealing, underrated buy. In the past year, the stock has quietly soared around 20% and year to date is up over 6%.
Like its peers, BMO trades at appealing multiples, with a price-to-earnings ratio of 14 and at 1.7 times its book value. In its most recent quarter, the bank’s net revenues grew by around 7%, and with the economy doing well and interest rates on the rise, things could get even better for BMO in future quarters.
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 David Jagielski has no position in any of the stocks mentioned. Magna is a recommendation of Stock Advisor Canada.