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.
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.
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.
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.
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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.