Monday saw stocks tumble after two solid weeks of gains. While the losses weren’t as extreme as those seen in March, they showed that the stock market could have more pain ahead. Ultimately, nobody knows what stocks will do in a given day, week, or month. However, over the extreme long term, they tend to rise. In light of that, many top TSX stocks could be considered bargains in April. The following are three particularly cheap ones to consider this month.
Like most energy stocks, Enbridge tanked following the oil price collapse. However, its actual fundamentals should be less impacted than other energy companies — particularly upstream companies. As a pipeline, ENB makes money off of shipping fees, not oil sales. As a result, it doesn’t need strong oil prices to make money.
It does, however, need significant demand for oil, which is coming under threat now. For this reason, I expect Enbridge’s Q1 earnings to be worse than past quarters. However, it will do better than upstream companies, making it a relatively attractive energy play. The stock also yields 8% and trades at just 15 times earnings.
Fortis (TSX:FTS)(NYSE:FTS) is one of Canada’s most reliable long-term dividend stocks. Having raised its dividend every single year for the past 46 years, it’s a confirmed Dividend Aristocrat. With a P/E ratio of 14.5 and a 3.5% yield, it’s relatively cheap and has a relatively high yield.
Fortis has a number of qualities that make it a good buy right now.
First, as an essential service, it’s able to keep operating through the COVID-19 lockdowns. Second, as a utility, it is capable of making it through a recession without lost earnings. Third, it has the potential to bounce back from the market crash faster than companies whose operations will be seriously impacted by COVID-19.
Over the decades, Fortis has proven itself to be one of the most dependable dividend stocks on the TSX. That track record has held up through the COVID-19 market crash, with FTS having fallen less than the average TSX stock.
This year, TD’s stock is way down. As a result, it trades at just 8.8 times earnings, making it the cheapest stock on this list. It’s also the second-highest-yielding stock on this list, with a 5.5% yield.
TD’s business will absolutely be affected by COVID-19 and weak oil. Thanks to these two developments, its mortgage income and oil & gas loans are under threat. However, the company will bounce back from these headwinds after the crisis abates. It’s also proportionately less exposed to them than other Canadian banks. Because of its U.S. presence, TD has relatively low exposure to oil & gas loans. This makes it one of the better buys among the Big Six.
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 Andrew Button owns shares of TORONTO-DOMINION BANK. The Motley Fool owns shares of and recommends Enbridge.