The Motley Fool

3 Top Value Stocks to Buy Now

Image source: Getty Images

First, a quick introduction on value stocks, whose number one attribute is that these stocks possess solid fundamentals. That would include dividends, earnings, sales, everything that would be appealing to a potential investor. However, what makes them valuable is that these stocks trade lower relative to peers.

During this market downturn, many stocks might be considered value stocks. Usually, these stock do quite well, but these days the stocks lag behind. So it’s important to be careful when picking the best stock for your portfolio.

So here are three options to consider in today’s market that provide amazing value.

E-L Financial

From the outside, E-L Financial Corporation Ltd. (TSX:ELF) looks to be one thing: expensive. But this is one of those value stocks that while it might take a larger investment, you’ll see larger gains in the short term. As of writing, the stock is still incredibly undervalued, with a potential upside of 44%. That would bring your shares from $664 today to $957 per share just by reaching fair value.

The company is an investment and insurance holding company, overseeing investments in global equities. These equities the company chooses mainly as long-term investments, bringing in above-average returns thanks to long-term gains and dividends.

With today’s market downturn, investors are getting a steal of a deal from company looking for low risk, high long-term gains.

Scotiabank

For those of you looking for a more familiar stock, banks have proven to be the perfect option among value stocks, especially for the Big Six Banks. But for my money, The Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) provides investors with a significantly higher opportunity among the Big Six Banks. Right now, the stock trades at about 40% below fair value, higher than many of its peers.

There are two things that investors should be interested in with Scotiabank: acquisitions and dividends. The company has been buying up companies both at home and abroad to diversify its portfolio and expand its base outside of just Canadian consumers.

In addition, the company offers an incredibly high dividend yield of 6.64% as of writing, which makes Scotiabank and incredibly valuable stock to have in your portfolio at today’s prices.

Transcontinental

Finally, we have Transcontinental Inc. (TSX:TCL.A), a printing company that has the highest potential of these value stocks — in the short term. While print may eventually disappear, right now it’s still relatively alive and well. The company has also been acquiring many other printing companies to take over a large market share of print in Canada.

As Transcontinental also does packaging, with the world going more online, this could leave room for another avenue of huge growth and the potential to make some high gains in a short period of time.

As of writing, Transcontinental trades at about $12 per share. In the next year, the stock could double in share price as the market rebounds and companies come back to life.

Meanwhile, what investors will really love is the company’s dividend yield of 7.41% as of writing.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA and TRANSCONTINENTAL INC A.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.