2 Discounted Financial Stocks to Buy Before the New Year

goeasy Ltd. (TSX:GSY) and Equitable Group Inc. (TSX:EQB) stocks could draw a greater breadth of consumers as banks are forced to build their war chests in 2019.

| More on:

Stock market turbulence in late 2018 has hit Canadian financials stocks hard. The S&P/TSX Composite Index is energy heavy, but the financials sector remains the most heavily weighted on the index. GDP growth is set to slow in Canada in 2019, but this does not mean that investors should turn their backs on a sector that continued to turn in record profits in the face of headwinds this year.

Canada’s banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), will reportedly stiffen capital rules to build a defensive position in the face of economic headwinds. Canada’s Big Six will be required to build core capital reserves as a buffer against a potential downturn.

Because of this, some investors may want to turn to alternatives that will have a freer hand in 2019. Of course, this will also come with added risk. Today, we are going to look at two stocks that are worth consideration after taking a beating from October into December.

goeasy (TSX:GSY)

goeasy stock was up 2.72% in early afternoon trading on December 13. However, the stock has plunged 34% over a three-month span. Back in the summer, I’d discussed why I was high on goeasy for the long term.

goeasy released record third-quarter results on November 7. Revenue rose 26% year over year to a record $130 million on the back of the growth of its easyfinancial consumer loan portfolio. goeasy has seen soaring demand for its unsecured loan product. In the above linked article, I’d discussed how rising interest rates, which have put the squeeze on consumers, could lead credit seekers into the arms of lenders like goeasy.

goeasy has climbed out of oversold territory as far as its technicals are concerned, but the stock is still hovering around 52-week lows. The board of directors declared a dividend of $0.225 per share, which represents a 2.5% yield. This is an added boon if value investors decide to buy into this sharp dip.

Equitable Group (TSX:EQB)

Equitable Group stock has dropped 6% month over month as of early afternoon trading on December 13. Shares are down 10.6% in 2018 so far. Back in July, I’d discussed why the housing rebound was great news for Equitable Group going forward.

Equitable Group released its third-quarter results on November 8. Deposits rose 23% year over year to $12.9 billion. Single Family Lending and Commercial Lending mortgage principal rose 13% and 27%, respectively. The Single Family segment was aided by high renewal rates, which Equitable Group projected would occur as a result of new OSFI mortgage rules. The alternative lender has also seen originations move in a positive direction, beating expectations. Equitable Group had forecast growth in Single Family lending of 2-4% for its original 2018 outlook, but now expects this segment to grow between 11% and 13%, an impressive turnaround.

The stock reached oversold territory in late October, but that does not mean the chance to add Equitable Group to your portfolio has passed. It also boasts a dividend of $0.28 per share, up 12% from November 2017. This represents a modest 1.6% yield.

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 Ambrose O'Callaghan has no position in any of the stocks mentioned.

More on Bank Stocks

Question marks in a pile
Bank Stocks

Should You Buy Canadian Western Bank for its 4.8% Dividend Yield?

Down 35% from all-time highs, Canadian Western Bank offers a tasty dividend yield of 4.8%. Is the TSX bank stock…

Read more »

analyze data
Bank Stocks

The Average Canadian Stock Investor Owns This 1 Stock: Do You?

This Canadian stock has about 49% ownership by the public, and with growth and dividends to consider, it's a top…

Read more »

falling red arrow and lifting
Stocks for Beginners

1 Dividend Stock Down 18% to Buy Right Now

CIBC (TSX:CM) is a strong dividend stock investors should certainly consider not just for passive income, but future growth as…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Tech Stocks

Forget TD Stock: 2 Tech Stocks to Buy Instead

TD remains a solid income stock but two outperforming tech stocks are better buys for their strong growth and upside…

Read more »

Question marks in a pile
Bank Stocks

Where Will Royal Bank of Canada Stock Be in 5 Years?

Royal Bank's continued focus on a strong capital position plus its acquisition of HSBC will likely ensure prosperous times ahead.

Read more »

Payday ringed on a calendar
Bank Stocks

How to Build a Bulletproof Monthly Passive-Income Portfolio With Just $10,000 and TD Stock

TD (TSX:TD) stock has been a poor performer over the last few years, but could be a big passive-income winner…

Read more »

Man considering whether to sell or buy
Bank Stocks

Is RBC Stock a Buy, Sell, or Hold?

Shares of Royal Bank of Canada have delivered game-changing returns to shareholders in the last two decades. Is RBC stock…

Read more »

Dice engraved with the words buy and sell
Bank Stocks

Is Scotiabank (BNS) Stock a Buy, Sell, or Hold?

Let's dive into whether the Bank of Nova Scotia (TSX:BNS) remains a solid buy or if it's more of a…

Read more »