The coronavirus crisis has led to a complete TSX Index meltdown. As stocks continue to tumble by default as the global outbreak worsens, now is not the time to panic. Investors should be buying stocks now that the level of panic is the highest it’s been in recent memory. Ample bargains have appeared in the market, and this piece will have a look at three of the cheapest.
Without further ado, consider the following bargains.
Shaw Communications: TSX Index growth bargain
Telecom stocks were supposed to be a safe haven when the TSX Index crashes. That was hardly the case when it came to Shaw Communications (TSX:SJR.B)(NYSE:SJR), as the stock nosedived nearly 30% thus far in 2020, bringing the stock down around 40% from its all-time highs.
As the number four major wireless carrier in Canada, Shaw is in a position to poach subscribers away from its Big Three incumbents. With potential regulator-granted competitive advantages, like first dibs at future spectra auctions, Shaw ought to be considered a growthier play relative to its behemoth-sized peers, who are going to be playing defence as the race to lower wireless rates rolls on.
The stock sports a handsome 6.2% yield, which is safe and sound. And shares trade at a stupidly low 6.4 times EV/EBITDA, 1.3 times book, and 1.7 times sales, making Shaw a massive bargain that could rally as much as 50% from these depths and still not be considered expensive.
The life insurers are not where you want to be when facing a recession. Manulife (TSX:MFC)(NYSE:MFC) shareholders have clearly ditched the stock without having the chance to ask questions. While a recession is a given at this point, I’m also in the belief that the stock is already priced with more than just a slowdown in mind.
Shares crashed 50% year to date and are nearing their 2008 lows, making Manulife one of the cheapest stocks on the TSX Index based on traditional valuation metrics. The company depends on Asia for a big chunk of its growth, and with the pandemic slated to take a toll on the global economy, the last thing on people’s minds will be where they can purchase life insurance or wealth management products as liquidity dries up.
At the time of writing, the stock sports a colossal 7.8% dividend yield and the stock trades at an absurd 2.7 times EV/EBITDA, 0.5 times book, and 0.3 times sales. That’s cheap. And if you consider yourself a long-term investor, you’ve got to pick up the name while it’s at rock-bottom prices.
Canadian Tire (TSX:CTC.A) is trading at crisis-level multiples after suffering a vicious 44% drop year to date. Shares are now down over 53% from all-time highs and are sporting a respectable 5.4% dividend yield.
Short-sellers targeted the company last year, and they’ve made a killing on their short positions, as the stock has indeed crumbled like a paper bag as they predicted. Amid the pandemic, few consumers are brave enough to venture into a brick-and-mortar retail store, and as business drags on, Canadian Tire could continue to face further downside.
But if you’re looking to bag a bargain on the TSX Index, I’d say now is the time to do it while the stock trades at unprecedented lows. The stock is in deep-value territory after its implosion, with shares trading at 6.8 times EV/EBITDA, 2.7 times book, and 0.8 times sales. The retailer has $8.3 billion in total debt on its balance sheet, and the dividend could fall under some pressure as the COVID-19 fallout drags, but I don’t think investors should be concerned given today’s rock-bottom prices.
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Fool contributor Joey Frenette owns shares of SHAW COMMUNICATIONS INC., CL.B, NV.