Investors looking to get a little more bang for their buck may want to carefully consider the three following deep-value stocks trading for under $5 on the TSX Index.
TorStar (TSX: TS.B) publishes one of Toronto’s most popular daily newspapers in addition to several community-based newspapers and a handful of digital ventures, including a jointly owned interest in the online employment opportunities website Workopolis.
Like many other print publications and publishing outlets, TorStar has faced challenges adapting to changing consumer media patterns, including the widespread proliferation of online media.
In September, the company launched a digital subscription through its thestar.com website, as it continues to transform its business under the leadership of a fresh management team, including the appointment of John Boynton to the CEO post in the spring of last year.
The company has struggled to post a profit in recent years, but it’s the balance sheet that makes this such an interesting play.
TorStar had $257 million in net assets on its books at the end of the third quarter versus a market capitalization of just $85 million as of Monday’s close.
TorStar stock yields shareholders a 9.5% dividend.
DHX Media (TSX:DHX)(NASDAQ: DHXM) is an upstart digital media company that has faced its own set of challenges in recent years following a string of M&A activity — some of which, in hindsight, may not have been all that well thought out.
Yet more recently, DHX stock has all but taken off with the stock up more than 135% since September.
DHX cut its dividend earlier this year, but if it can continue to execute its various children’s programming initiatives, such as its WildBrain digital platform, investors could find they’re in for a real treat.
Shareholders in Bombardier (TSX: BBD.B) have also been handsomely rewarded for their Foolishness (note the capital “F”), as the company has seen its share price increase more than five-fold off its early 2016 lows.
Yet since then, BBD.B stock has fallen from above $5 to $3.26 as of Monday’s closing.
Part of that is a natural function of the markets “selling their winners“; however, there’s also reason to believe that the U.S. tariffs on steel and aluminum imports — and the Canadian government’s reciprocal response — may end up having a more than insignificant detrimental impact on the company’s input costs until the tariff issue is resolved.
The fact that the shares have since fallen below their 200-day trading average might be another sign to wait on the market to establish a new floor price on BBD.B stock.
Bottom line
Stocks trading below $5 are often unavailable to institutional investors due to their perceived risk.
Sometimes those perceptions of risk can end up proving accurate — yet at other times the inability of institutional managers to be able to “get in” on an undervalued investment ends up creating attractive opportunities for more aggressive investors.
Fool on.
