3 Top TSX Index Stocks Hitting 52-Week Lows

This group of TSX Index stocks, including Encana Corp (TSX:ECA)(NYSE:ECA), is getting smoked. Is it time to pounce on the opportunity?

| More on:

Hi there, Fools. I’m back again to highlight three stocks hitting new 52-week lows. As a quick refresher, I do this because the greatest wealth is built by buying solid stocks

In other words, the best time to buy high-quality stocks is, quite simply, when no one else wants them.

So, without further ado, let’s get to this week’s list of bargain plays.

Natural selection

Kicking things off is Encana (TSX:ECA)(NYSE:ECA), which hit a new 52-week low of $8.43 late last week. Shares of the natural gas company are down 30% year to date versus a loss of 15% for the S&P/TSX Capped Energy Index.

Earlier this month, Encana plunged 15% in a single day — its steepest ever intraday drop — as investors rebelled against the $5.5 billion all-stock purchase for Newfield Exploration. But while it might take a while for Mr. Market to get over the dilution concerns, management remains confident that Newfield will boost Encana’s key cash flow figures over time.

With the stock currently trading at a forward P/E of 10, now might be a good time to bet on management’s long-term conviction.

Childish behaviour

Next up, we have Dorel Industries (TSX:DII.B), whose shares hit a 52-week low of $19.41 on Friday. Year to date, the manufacturer of children’s products, bicycles, and furniture are down 36% versus a loss of 10% for the S&P/TSX Capped Consumer Discretionary Index.

Trade trouble between the U.S. and China continues to weigh heavily on Dorel. In Q3, net income plunged 28% on a revenue increase of just 4.3%. Moreover, management warned that tariffs on Chinese imports could jump from 10% to 25% in 2019 if a new trade agreement isn’t reached.

Of course, the stock now boasts an especially juicy dividend yield of 7.8%. Throw in a comforting beta of 0.4 — 60% less volatility than the market — and Dorel’s risk/reward trade-off seems attractive.

Lumber letdown

Rounding out our list is Canfor (TSX:CFP), which hit a 52-week low of $18.27 late last month. Shares of the lumber company are off 32% over just the past three months, while the S&P/TSX Capped Materials Index is down 11% in the same period.

Troubling market conditions are forcing management’s hand. Earlier this month, Canfor said it will temporarily cut lumber production in B.C. by about 10% in the current quarter. The company cited slumping lumber prices, increased log costs, and wildfire-related supply issues for the move.

On the bargain investing/bright side, Canfor now trades at cheapish forward P/E of 11. As long as you can stomach plenty of volatility — beta of 2.1 — the stock remains an intriguing long-term turnaround opportunity.

The bottom line

There you have it, Fools: three beaten-down bargain opportunities for you to consider.

To be sure, they aren’t formal recommendations. Instead, view them as a starting point for further research. Stocks in decline can keep falling for a prolonged period of time, so extra due diligence is required.

Fool on.

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.

Brian Pacampara owns no position in any of the stocks mentioned.   

More on Investing

A woman shops in a grocery store while pushing a stroller with a child
Dividend Stocks

1 Consumer Staples Stock That Thrives in Any Economy

Backed by consistent sales and smart expansion, this top consumer staples stock proves why essential businesses can offer stable gains…

Read more »

Stethoscope with dollar shaped cord
Cannabis Stocks

Best Stock to Buy Right Now: Bausch Health vs Canopy Growth?

While both stocks are risky, Bausch Health is seeing operational momentum, while Canopy Growth is still struggling with losses.

Read more »

Dividend Stocks

1 Magnificent Canadian Stock Down 22% to Buy and Hold for Decades

This top TSX stock has increased its dividend annually for the past 29 years.

Read more »

Canadian Dollars bills
Dividend Stocks

How to Invest $250,000 in Canadian Dividend Stocks for $12,027 Each Year

Here's how to make the ideal portfolio to never worry about anything again.

Read more »

Woman in private jet airplane
Investing

Shares Seem to Be Stuck on the Tarmac. But Don’t Count Air Canada Out.

Air Canada (TSX:AC) stock is starting to look intriguing as we head into the peak summer travel season.

Read more »

social media scrolling on phone networking
Dividend Stocks

I’d Put My Entire TFSA Into This 7.6% Dividend Giant

Telecom stocks can be risky these days, but this one offers up safety in spades.

Read more »

hand stacking money coins
Dividend Stocks

6% Dividend Yield? I’m Buying and Holding This TSX Stock for Decades

The earnings and cash flow of this Canadian company is likely to grow at a mid-single digit rate, driving its…

Read more »

Financial analyst reviews numbers and charts on a screen
Dividend Stocks

How to Build a $50,000 Portfolio That Can Weather Any Market Storm

With proper asset allocation and a long-term mindset, you can create a portfolio that’s resilient in downturns and capable of…

Read more »