Bargain Alert: 3 Fresh Value Stocks to Buy Now

This trio of stocks, including Home Capital Group Inc. (TSX:HCG), might be too cheap to pass up.

| More on:

Image source: Getty Images

Hi, Fools. I’m back again to highlight three top stocks with low P/E ratios. As a quick reminder, I do this because the world’s best investors succeed by buying quality companies

The P/E ratio has its flaws, of course. All metrics do. Nevertheless, it remains one of the most straightforward and useful ways that investors have to measure value (the lower, the better).

Without further ado, let’s get to our list of low-P/E stocks.

Rock-solid pick

Leading off our list is Granite REIT (TSX:GRT.UN), whose shares sport a paltry P/E of 4.6.

For those unfamiliar with Granite, it develops and manages industrial, warehouse, and logistical properties in North America and Europe. To be sure, Granite leases primarily to auto parts giant Magna, which adds plenty concentration risk to the business model.

That said, Granite continues to actively reduce its dependence on Magna, improving its credit rating and debt costs in the process.

“The Granite team continues to successfully execute on our corporate objectives for 2018, including the reduction in Magna concentration and conversely the growth in modern distribution and e-commerce markets and assets,” said President and CEO Kevan Gorrie last quarter.

Along with a low P/E, Granite shares offer an attractive dividend yield of 4.4%.

Home cheap home

With a P/E of 10, residential lender Home Capital Group (TSX:HCG) is next up on our list.

The stock plunged in December after Warren Buffett’s Berkshire Hathaway said it would “substantially exit” its investment in Home Capital. While the stock has recovered nicely since then, it remains off about 12% from its 52-week highs. Analysts cite negative housing data, tighter regulatory rules, and recent share price momentum as reasons to head back to the sidelines.

That said, Home Capital’s year-over-year fundamentals are much improved, suggesting that the stock has plenty of room to run.

“We are delighted to see Home Capital back on its feet with healthy liquidity and a solid capital position,” Buffett said in a press release.

Home Capital shares are up 10% so far in 2019.

Buried treasure

Rounding out our list of bargains is gold miner OceanaGold (TSX:OGC), which sports a P/E of 11.

OceanaGold’s valuation is particularly attractive, considering that both its stock and business have performed well of late. The shares are up 25% over the past year versus a gain of just 2.5% for the S&P/TSX Capped Materials Index. Operationally, the company posted 2018 full-year revenue of $773 million, $121 million in free cash flow, and increased its cash balance to $108 million.

“We are well positioned to invest in our future to expand our operations and/or extend their mine lives, all with an objective to create long-term value for both shareholders and communities in which we operate,” said President and CEO Mick Wilkes.

Given OceanaGold’s strengthening fundamentals and negative beta, the risk/reward trade-off looks attractive.

The bottom line

There you have it, Fools: three top low-P/E stocks worth checking out.

They aren’t formal recommendations, of course. View them instead as a jumping-off point for further research. It’s easy to fall into “value traps” when you’re out hunting for bargains, so extra caution 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 companies mentioned. The Motley Fool owns shares of Berkshire Hathaway (B shares). Magna is a recommendation of Stock Advisor Canada.

More on Investing

edit Women wearing red sweater shopping online and using credit card at home office
Dividend Stocks

Safe Stocks to Buy in Canada for December 2023

A Big Bank and an iconic retailer are the safe Canadian stocks to buy in December 2023.

Read more »

gas station, convenience store, gas pumps

Better Buy: Couche-Tard Stock or Parkland Fuel Stock?

Alimentation Couche-Tard (TSX:ATD) and Parkland Fuel (TSX:PKI) are retailing greats that have really gotten hot in recent months!

Read more »

Businessman holding AI cloud
Tech Stocks

1 AI Stock I’d Buy Over Nvidia for 2024

Nvidia (NASDAQ:NVDA) stock isn't the only AI play to put atop your shopping list this December.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Tech Stocks

Got $1,000? 3 Top Canadian Stocks to Buy in December

Given their high growth prospects and attractive valuations, these three growth stocks could deliver superior returns over the next three…

Read more »

A bull outlined against a field

3 Cheap TSX Stocks I’d Buy Before the Bull Market Arrives

Undervalued TSX stocks such as Savaria and BRP trade at a significant discount to consensus price target estimates.

Read more »

Dividend Stocks

2023 TFSA Contribution Time: 2 Dividend Stocks to Buy with $6,500

Earn tax-free dividend income by investing in these top Canadian stocks via your TFSA.

Read more »

grow dividends
Tech Stocks

3 Ways to Find Momentum Stocks That Won’t Drop

Look for momentum stocks that have been climbing steadily for years and can give you a boost from time to…

Read more »

Paper airplanes flying on blue sky with form of growing graph

Down 34% in 8 Months, Is Bombardier Stock a Buy Today? 

Is the stock a buy at less than $50 a share?

Read more »