2 Super-Cheap TSX Stocks to Watch

With markets bouncing around lately, long-term investors can scoop up deals now. Check out these two super-cheap TSX stocks today.

| More on:
Man holding magnifying glass over a document

Image source: Getty Images.

As markets struggled through most of March, blue-chip stocks have traded lower. Now, there are some cheap TSX stocks available for long-term investors to pounce on.

With a long enough investment horizon, any potential turbulence ahead in the near term will be negligible. As such, investors can now seek out stocks at attractive valuations with solid yields to buy and hold for the long term.

However, it’s important to be aware of the risks surrounding any individual stock. In some cases, the stock may have just been dragged down with the market. But, in other cases, the stock is facing some true challenges ahead.

Today, we’ll look at two cheap TSX stocks investors can keep an eye on and what might be in store for these stocks.

RBC

Royal Bank of Canada (TSX:RY)(NYSE:RY) is the largest bank in Canada by market cap. When it comes to rock-solid stocks, RBC is right up there with the best.

This stock has climbed a bit in the past week or so but is still far below even its February levels. As of writing, it’s trading at $85.63.

At that price, the dividend yield is 5.04%. That should be mouth-watering for investors, as it’s not very common that RBC offers a yield exceeding 5%. In fact, its average yield over the past five years is below 4%.

So, at a relatively low P/E ratio and with an outsized yield, this cheap TSX stock seems to offer great value to investors.

Now, it should be noted that the bank will face some challenges in the near term. Lower interest rates mean lower margins generally, and mortgage deferrals could make for a cash flow pinch.

However, RBC is quite well capitalized and has a healthy balance sheet. It also has liquidity support measures to fall back on courtesy of the government. As such, I wouldn’t bank on RBC slashing its dividend any time soon.

Sure, we might see slower growth for a short period, but over a long horizon, there isn’t much to worry about here.

Suncor

Suncor Energy (TSX:SU)(NYSE:SU) is an energy company based out of Alberta. It mainly focuses on producing synthetic crude from its resources in the oil sands.

This cheap TSX stock is trading at $24.82 as of writing. That figure is a far cry from its late-February levels of above $40.

With that price, the stock is currently yielding a mammoth 7.49%. So, for investors looking for a blue-chip stock with a big dividend, it seems Suncor is attractive.

However, there are some serious concerns in the oil industry right now. In fact, a lot of Canadian producers are operating at just breakeven prices right now.

This has certainly, in conjunction with the global pandemic, led to the steep drop in energy stocks. If you don’t want to make a bet on the Canadian oil market, then staying away from Suncor is probably a prudent move.

Choosing cheap TSX stocks

With many stocks trading at solid long-term valuations right now, investors have options. As such, it’s vital to carefully weigh the risk/reward ratio of individual stocks in these times.

RBC is a solid choice for those looking to lock in a big, reliable yield. While Suncor might have an even more attractive yield, it carries some direct risk with the oil situation. For some, it might not be worth taking on that extra risk.

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 Jared Seguin has no position in any of the stocks mentioned.

More on Energy Stocks

energy industry
Energy Stocks

3 Cheap Energy Stocks to Buy Right Now to Earn Superior Returns

Given the favourable environment and their cheaper valuations, these three energy stocks can outperform this year.

Read more »

Oil pumps against sunset
Dividend Stocks

1 Energy ETF With an Unbelievable 55% Gain

An energy ETF with proven resiliency continues to outperform and has gained more than 50% thus far in 2022.

Read more »

oil tank at night
Energy Stocks

1 Severely Undervalued TSX Stock in the Red-Hot Energy Patch

Suncor Energy (TSX:SU)(NYSE:SU) stock has been a relative underperformer that could have most room to run as oil stays above…

Read more »

Oil pipes in an oil field
Energy Stocks

Canadian Natural Resources (TSX:CNQ) Stock: A Perfect Pick for Income and Value

Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ) stock may have doubled up in a year, but shares are still cheap with room to…

Read more »

canadian energy oil
Dividend Stocks

2 TSX Oil Stocks That Have Gained Over 45% in 2022

Oil prices are soaring, and nothing seems to be stopping their rise. These two oil stocks could be excellent investments…

Read more »

Canadian energy stocks are rising with oil prices
Energy Stocks

3 Reasons Why TSX Energy Stocks Could Keep Rallying

TSX energy stocks have gained 60% in 2022, while U.S. energy names have soared 47%.

Read more »

Value for money
Energy Stocks

Scared of a Market Rout? Buy These 2 Value Stocks

Investors fearing a market rout can take positions in two value stocks from the top-performing energy sector.

Read more »

oil and natural gas
Energy Stocks

Suncor Energy Stock Could Have More Room to Run

Suncor Energy (TSX:SU)(NYSE:SU) stock is one of many big oil plays that may be too undervalued for its own good.

Read more »