Many market participants are expecting another crash at the onset of the second wave of the pandemic. While that can’t be ruled out completely, many top TSX stocks are still trading below their fair values. So, if you are sitting on some cash, consider these stocks with attractive valuations and handsome growth potential.
WSP Global: A low-risk, stable business model
An infrastructure consulting company WSP Global (TSX: WSP) is comparatively well placed amid the pandemic. Shares of WSP were quick to recover and are up almost 35% since its record lows in March.
What makes WSP attractive for investors is that it’s a pure-play consulting and design company. It bears no construction risk. It generates 18% of revenues from Canada, 29% from the Americas, and the rest from Asia-Pacific and Europe. WSP’s diversified revenue base makes it a relatively safe bet.
WSP has acquired multiple U.S.-based engineering companies in the past, and now it has suggested more such corporate activities with its recent capital-raising program.
Despite its recent rally, WSP stock seems not too stretched from the valuation standpoint. Its stable business model, strong balance sheet, and operational excellence make it an attractive investment proposition for long-term investors.
WSP stock has returned almost 230% in the last 10 years, notably beating the TSX Index.
FirstService: Real estate operations that offer high growth prospects
FirstService (TSX: FSV)(NASDAQ: FSV) manages residential communities and provides essential property services. It generates 90% of its consolidated revenues from the U.S., while the rest comes from Canada. Notably, it has managed to grow revenues by 16% compounded annually in the last five years.
FSV’s superior top-line growth was reflected in its market performance, as the stock is up almost 240% in the last five years.
FirstService offers huge growth prospects with its presence in attractive markets. Its recurring revenues and solid balance sheet make it a stable investment proposition for investors.
FirstService stock has rallied more than 55% since its record lows in March and looks overvalued. Thus, the stock could be relatively more volatile but offers attractive growth potential for high-risk investors.
B2Gold: Shinier than the yellow metal
A low-cost senior gold producer, B2Gold (TSX: BTO)(NYSE:BTG) has been an immense wealth creator for its shareholders in the last few years. BTO stock has risen from $1 in early 2016 to $8 levels last month.
Its production growth notably outperformed peers in the last few years. In 2020, B2Gold plans to produce one million ounces of gold, almost 5% higher than the last year.
Importantly, higher yellow metal prices have substantially uplifted gold miners’ earnings in the last few quarters. Analysts expect the trend to continue and estimate B2Gold’s 2020 earnings to almost double compared to the last year.
B2Gold stock is currently trading at a forward price-to-earnings multiple of 15 times, representing a large discount against its historical average. I think such stupendous growth at a discounted valuation would highly interest discerned investors.
