If you haven’t yet benefited from the sell-offs and low valuations of amazing companies offered by the market crash, there’s still time. Your choices might be limited now, as a lot of good stocks have reclaimed their pre-crash valuations.
Still, if you are willing to sift through some of the still-cheap stocks to look for companies with the highest chances of recovery, you can still use this market crash to your favour.
The best place to look for cheap stocks would be the industries that have suffered the most and are slow to recovery: energy, airlines, financial sector, and some real estate companies.
A fast-growing energy stock
Parkland Fuel (TSX:PKI) is an independent fuel retailer, a decent growth stock, and a seven-year-old dividend aristocrat. The company got hit just as hard as other companies in the sector when the worst of the market crash hit and fell over 58% of its start-of-the-year value. While it has recovered substantially, it’s still available at a 23% discount.
This $5.49 billion market cap company operates in 25 countries. Two major fronts the company operates in are supply and marketing of fuel and convenience stores. It works with (and under) recognized brands like Chevron, Sol, and Pioneer, etc.
Before the crash, the company grew its market value by about 100% in the past five years. Even now, with the current low valuation, it’s offering a five-year CAGR of 12.34%.
That’s substantial enough to turn a one-time $30,000 investment into a million dollars in 31 years. As for dividends, the company has been growing its payouts for seven consecutive years and hasn’t slashed them even during the recent market crash. It is currently offering a modest yield of 3.22%.
A growth-oriented REIT
Canadian Apartment Properties REIT (TSX:CAR.UN) is not as discounted as Parkland, but it’s still 20% low from its yearly high value, and currently trading at $48.4 per share. It’s also a Dividend Aristocrat, with eight consecutive years of growing dividends under its belt.
Thanks to a portfolio of 65,000 apartments, townhouses, and manufactured homes across Canada, most of its income is tied to dependable rentals.
Despite the harsh first quarter, the company managed to increase its operating revenues by 18.8%, and NOI by 21.3%. The company offers amazing capital growth opportunities. The stock returned over 114% in the past five years, resulting in a CAGR of 16.49%.
At this rate, a $30,000 investment can grow to a million dollars in 23 years inside your Tax-Free Savings Account (TFSA) or RRSP.
While its dividend growth is not as substantial, the current yield is decent enough at 2.92%. But the payout ratio is very safe at 20.8%.
Even though past performance is not a surety of future growth, that’s all we have to go on for now. That said, both Parkland and CAP REIT have strong business models and dependable income sources.
Both stocks have the potential to grow your wealth substantially. If you are still on the lookout for discounted stocks, Parkland and CAP REIT deserve to be on your radar.
Speaking of market crash 2020...
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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.