MENU

Get Rich the Warren Buffett Way: Here are 3 Top Value Stocks for 2019

Hi, Fools. I’m back to call attention to three attractive low-P/E stocks. Why? Because some of the easiest gains in the market are made by buying good companies: when they’re being abandoned by other investors; when they’re selling below intrinsic value; and when the risk/reward trade-off is highly attractive.

As the great Warren Buffett once quipped, “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”

In today’s article, I’ll look at three low-P/E plays that look especially solid for 2019.

Husky value

Kicking off our list is Husky Energy (TSX:HSE), whose shares sport a trailing 12-month (TTM) of 7.5. The energy company is down 30% over just the past three months versus a loss of 28% for the S&P/TSX Capped Energy Index.

Husky is doing what it can to deal with lower oil prices, as well as Alberta’s mandatory curbs on output. Last month, management cut its 2019 capex program by $300 million, or about 8%. Husky now expects 2019 capex of $3.4 billion, lower than its prior view of $3.7 billion.

“The company retains further flexibility to reduce capital spending, including the ability to pace development of growth projects that are currently in flight,” Husky said.

If you believe in a 2019 turnaround in oil prices, Husky’s low P/E and 2.8% yield make it a solid way to wager.

Magna cum laude

Next up, we have Magna International (TSX:MG)(NYSE:MGA), which has a TTM P/E of 6.8. Shares of the auto parts supplier are down 17% over the past year versus a loss of 6% for the S&P/TSX Capped Industrials Index.

Magna is also a solid bet to turnaround. In the most recent quarter, adjusted EPS climbed 12% as revenue increased 9% to $9.6 billion. And while the company did lower its full-year outlook, management says that volumes in the industry remain strong.

“They are healthy volume levels,” said CFO Vince Galifi. “Sure it’s come off a bit, but some of them are at really good levels. The macroeconomic environment in the United States is still very favourable.”

With a decent dividend yield of 2.9% to go along with the paltry P/E, now’s a good time to bet on that bullishness.

Imperial opportunity

Rounding out our list is Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM), whose shares sport a TTM P/E of 8.8. The banking gorilla is down 15% over just the past three months versus a loss of 14% for the S&P/TSX Capped Financial Index.

CIBC didn’t exactly end 2018 on a strong note. In Q4, EPS of $3.00 missed estimates by $0.04, while revenue came in $140 million below expectations.

On the bright side, CIBC’s capital ratios are still strong — tier 1 ratio of 12.9% and total capital ratio of 14.9% — suggesting that its capital strength and competitive position remain solid.

“Looking forward, we are well positioned to continue to build a client-focused bank that delivers superior shareholder returns,” said President and CEO Victor Dodig.

With a scrumptious dividend yield of 5.2% — a five-year high for the stock — CIBC might be too tempting to pass up.

The bottom line

There you have it, Fools: three attractive value stocks for 2019.

As always, they aren’t formal recommendations; they’re simply ideas worth further research. It’s very easy to get caught by low-P/E “value traps,” so plenty of due diligence is still required.

Fool on.

You might be missing out on one of the biggest opportunities in Canadian investing history…

Marijuana was legalized across Canada on October 17th, and a little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

Besides making key partnerships with Facebook and Amazon, they’ve just made a game-changing deal with the Ontario government.

One grassroots Canadian company has already begun introducing this technology to the market – which is why legendary Canadian investor Iain Butler thinks they have a leg up on Amazon in this once-in-a-generation tech race.

This is the company we think you should strongly consider having in your portfolio if you want to position yourself wisely for the coming marijuana boom.

Learn More About This TSX Stock Now

Brian Pacampara owns no position in any of the companies mentioned. Magna is a recommendation of Stock Advisor Canada.

 

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.