Bargain Buys: 3 Stocks Down Big This Year With Lots of Upside

MEG Energy Corp (TSX:MEG) and these two other stocks are trading below their book values and could be great deals for investors that buy today.

| More on:
Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks

Image source: Getty Images.

The markets can sometimes be overly punitive on individual stocks, and while that can be bad news in the short term, for investors willing to hang on, there could be some significant returns to be gained. Let’s take a look at three stocks that have struggled so far in 2019, but still have a lot of potential.

MEG Energy Corp (TSX:MEG) is down more than 15% since the start of the year as the stock went over a cliff after Husky walked away from its hostile takeover of the company when enough support wasn’t generated from shareholders to continue on. While it was no doubt disappointing news for MEG, for the stock to come crashing down and hit a new 52-week low seems a bit extreme. However, the stock did get a boost from the takeover news, when it dropped below where it was before investors learned of the potential acquisition.

Today, MEG is trading at around half of its book value and could be a great bargain for investors. The company is coming off a strong year where sales were the highest they’ve been since 2014. And with oil prices looking to be stronger this year, MEG could be a stock that could benefit significantly from a stronger industry.

Canfor Corporation (TSX:CFP) is another stock that’s been struggling heavily, losing more than half of its value in the past 12 months and year to date down 15%. It didn’t help that back in January the company announced that it was scaling back production due to conditions in the industry, including lower lumber prices. However, over the long term, with population growth and a growing economy, there’s going to continue to be strong demand for lumber. Whether it’s new homes being constructed or simply renovations being done on existing ones, it’s an industry that’s not going away anytime soon.

In 2018, Canfor generated more than $5 billion in sales, which is up 50% from 2014’s tally of $3.3 billion. The company has been growing, and profits have been as well. Canfor is trading below its book value, although not to the extent that MEG is, and it too could be a great pickup on what’s been a big dip in price.

Cascades Inc (TSX:CAS) stock was hit hard when back in February the company announced that it was not going to be renewing the leases at two of its plants in Ontario. Cascades decided it was better off to source externally than to continue production at those unprofitable locations. Year to date, the stock is down more than 22%, with most of the decline coming after the news was released.

Like MEG, Cascades is trading at a heavy discount with the share price being around half of its book value despite the company turning a profit over the past three years and revenues continuing to rise since 2014. Ultimately, there’s still a lot of demand for packaging and recycling solutions, which is why I wouldn’t be terribly worried over Cascades’ future. The stock is currently trading right around its 52-week low at writing.

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 David Jagielski has no position in any of the stocks mentioned.

More on Energy Stocks

Arrowings ascending on a chalkboard
Energy Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Canadian Natural Resources stock is well set up to beat the TSX as it continues to generate strong cash flows…

Read more »

energy industry
Energy Stocks

2 TSX Energy Stocks to Buy Hand Over Fist Now

These two rallying TSX energy stocks can continue delivering robust returns to investors in the long term.

Read more »

green energy
Energy Stocks

1 Magnificent TSX Dividend Stock Down 37% to Buy and Hold Forever

This dividend stock has fallen significantly from poor results, but zoom in and there are some major improvements happening.

Read more »

oil tank at night
Energy Stocks

3 Energy Stocks Already Worth Your While

Here's why blue-chip TSX energy stocks such as Enbridge should be part of your equity portfolio in 2024.

Read more »

Solar panels and windmills
Energy Stocks

1 Beaten-Down Stock That Could Be the Best Bet in the TSX

This renewable energy stock could be one of the best buys you make this year, as the company starts to…

Read more »

Dice engraved with the words buy and sell
Energy Stocks

Is Enbridge Stock a Buy, Sell, or Hold?

Here's why Enbridge (TSX:ENB) remains a top dividend stock long-term investors may want to consider, despite current risks.

Read more »

Gas pipelines
Energy Stocks

If You Had Invested $5,000 in Enbridge Stock in 2018, This Is How Much You Would Have Today

Enbridge's high dividend yield hasn't made up for its dismal total returns.

Read more »

Bad apple with good apples
Energy Stocks

Avoid at All Costs: This Stock Is Portfolio Poison

A mid-cap stock commits to return more to shareholders, but some investors remember the suspension of dividends a few years…

Read more »