Value Investing: Top 3 TSX Stocks

Bear markets create major buying opportunities and there are a number of cheap stocks on the TSX, but these three companies have the best value.

As most investors know by now, there’s no better time to buy stocks than when the market is crashing.

Everyone knows that the key to great investing is to buy as low as possible and sell as high as you can. So naturally, there is no better time to find stocks than in the midst of a sell-off.

When the market is crashing, investors are driven by fear, so logic gets thrown out the window, and people end up selling stocks at prices they should be buying them at.

Three stocks that look extremely attractive today are Sleep Country Canada Holdings Inc (TSX: ZZZ), Inter Pipeline Ltd (TSX:IPL) and goeasy Ltd (TSX: GSY).

Sleep Country

Sleep Country is a great business to own shares of given its dominant position in the mattress and sleep accessories market in Canada.

The stock has come down by more than 15% off its all-time high, offering investors an attractive price to go ahead and gain some exposure.

The business has been impressive the last few years, buying up an online mattress company Endy, which has helped to diversify its operations and grow its revenue as e-commerce continues to gain in popularity.

Plus, it continues to search for new avenues of growth, whether through acquisitions or organically, finding new and exciting products to bring to its customers.

The company is extremely attractive at these prices given its long-term potential. It currently trades at just 12.3 times earnings and pays a 4.2% dividend.

You hardly ever find stocks trading at just 12 times earnings, and it’s even rarer to find a stock of this quality trading for so cheap, so don’t miss out on this major opportunity.

Inter Pipeline

Inter Pipeline is an energy infrastructure company in Western Canada that provides crucial services to the Canadian energy industry.

The company is a great investment for Canadians, as its operations are crucial to the entire Western Canadian energy industry.

At the end of last week, the stock had fallen more than 25% from its 52-week high, offering a major discount for investors who have been eyeing the stock.

By Monday, the stock fell again, and now sits roughly 35% below where it was trading just one month ago.

Even if the company faces some short-term headwinds as oil prices collapse around the world, over the long term, the stock remains attractive, so investors should use this opportunity to grab shares at a discount.

At current prices, the company trades at just 11 times earnings and pays a dividend that yields roughly 12%.

If the stock continues to fall further after this weekend’s developments in oil markets, it could be the most attractive stock on the TSX, so investors should watch carefully and look for these major opportunities opening up.

goeasy

goeasy is a specialty finance company that makes most of its money through consumer lending. Given the nature of its business, the stock has been sold off heavily the last two weeks.

Out of the three companies on this list, it makes the most sense for goeasy to have been sold-off given that a slowdown in the economy would directly affect its operations, more so than the other two businesses. At least that’s what it would seem on the surface.

Digging deeper into goeasy’s numbers however, shows just how resilient its loan portfolio is. And according to estimates, delinquencies would need to nearly double in order for goeasy’s profitability to be threatened.

goeasy was one of Canada’s hottest growth stocks before the market started selling off a couple weeks ago. Since then the stock is down more than 30%, yet its share price is still above where it was as recently as October.

The discount investors can now get is massive, as the company is trading for less than 14 times earnings, and paying a dividend that’s yielding roughly 3.1%.

Bottom line

When markets crash, it’s the single biggest opportunity to buy stocks.

Investors should ignore the short-term noise, analyze these companies for their long-term prospects and select those companies with the most value at current prices.

By focusing on the long-term and taking advantage of these major discounts in share prices, investors will set themselves up for major investing success.

Fool contributor Daniel Da Costa has no position in any of the stocks mentioned.

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