The Covid-19 pandemic is doing a number on global stock markets, and we are in the midst the kind of market correction not seen since the 2008 recession.
The last decade was fantastic for the TSX. The overall TSX Index climbed to all-time highs by the end of 2019, and it was next to impossible to pick out value stocks. Most of the cheapest equities trading on the TSX were there because they had weak long-term outlooks or apparent issues.
The coronavirus-led sell-off has entirely changed the landscape. There are dozens of high-quality value stocks in Canada trading for low prices. With the market correction taking its toll on fantastic businesses, there is ample opportunity to pick up equities at a discount.
I am going to take a closer look at two of Canada’s most attractive stocks trading for stupidly cheap prices.
Imperial financial institution
The Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is one of the most affordable Big Five banking stocks in Canada. The stock was already trading for lower prices due to investors avoiding the bank amid fears of a housing market crash.
I think investors focus so much on possible negatives that they forget to look at the fundamentally promising aspects of CIBC. It is the weakest among the banking sector on the TSX, but that makes CIBC’s position attractive. The bank is continually making efforts to expand its wealth management business and to substantial success.
CIBC’s operational efficiency is reliable, as well as its return on equity. Its expansion into the U.S. markets is adding to its bottom line. At writing, the stock is trading for $77.48 per share – more than 30% down from the same time last year. It offers a dividend yield of 7.54% to shareholders.
More than a life insurance provider
Another beaten-down high-quality stock on the TSX right now is Manulife Financial Corp. (TSX:MFC)(NYSE:MFC). Manulife is a premier financial services provider that works as a life insurer, a bank, wealth manager, and fund provider, and it owns a significant portfolio of real estate.
The firm’s primary avenue for growth has been the Asian markets over recent years. The pandemic is increasing the death toll in its Asian segment, and that will affect Manulife’s bottom line. A further decline in asset value around the world is adding to Manulife’s woes.
Manulife, however, prepared for the possibility of a financial crisis after learning from its aggressive approach during the last recession. Manulife has invested most of its assets in conservative bonds.
The stock is trading for $14.74 per share at writing. It is down by almost 47% from its January 2020 peak. Offering a juicy dividend yield of 7.60%, this dividend-paying stock has rapidly entered value stock territory, and it could be a fantastic buy right now.
Canada’s stock market is suddenly full of phenomenal value stocks today. CIBC and Manulife are only two assets that are declining into the value stock category. The crash is finally here, and it is up to the investors who prepared for this to buy high-quality stocks on the dip.
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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 Adam Othman has no position in any of the stocks mentioned.