Got $2,000? 2 TSX Stocks to Buy Now Before They Rebound

Bank of Montreal (TSX:BMO)(NYSE:BMO) is one of many dirt-cheap TSX stocks that value investors should seek to buy right now.

| More on:
Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks

Image source: Getty Images.

If you’ve got an extra $2,000 lying around, now is as good a time as any to put it into the TSX stocks of wonderful businesses  trading at discounts to their intrinsic value. While the market itself may seem a tad on the frothy side given the magnitude of the recent relief rally and the coronavirus-related uncertainties that still linger, there are ample bargains for those who know where to look.

It’s a stock picker’s market right now, and as a self-guided investor, you’ve got what it takes the beat the markets at its own game. Certain areas of this market could stand to mirror the broader TSX Index’s upward move with some lag.

This piece will look at two TSX stocks that could soar into year-end, regardless of the seemingly never-ending lousy news that’ll be flowing in.

Badger Daylighting: Top infrastructure TSX stock to buy

First up, we have Badger Daylighting (TSX:BAD), a firm that provides hydrovac soil excavation services, primarily for municipal clients and firms within the oil and gas (O&G) industries. The company has a fleet of cutting-edge hydrovac-equipped trucks that can deliver its services to where it’s needed, either to dig up buried infrastructure (thus exposing it to the light of day), or providing the groundwork to layout new underground infrastructure.

There’s no question that the business of digging with pressurized water is boring. But sometimes boring is beautiful, especially if you can get into such a name at a discount. Shares of Badger are down just shy of 38% from all-time highs and are trading at a mere 2.8 times book, the lowest it’s been in over eight years.

With the U.S. ramping up infrastructure spending, with $1 trillion to give the economy a jolt after the coronavirus crisis, the demand for Badger’s services will stand to increase substantially. Moreover, as the weight gradually come off the shoulders of the ailing O&G sector, Badger could stand to see a bit of pressure fall off its stock over the next year and beyond.

Bank of Montreal: The best bank for your buck

Next up, we have what I believe is the best bank for your buck at today’s juncture. Bank of Montreal (TSX:BMO)(NYSE:BMO) isn’t some low-quality regional bank with a sub-par management team who’s lost control of the ship amid this horrendous coronavirus typhoon (that just happened to hit when Canada was enduring a rare credit downturn). Still, it sure is priced like it, with the stock trading at a slight discount to book.

While loan loss provisions for the second quarter were excessive, given the likelihood that peak provisioning for the Canadian banks may now be behind us, as the economy reopens for business, now is as good a time as any to be a buyer of a battered bank like BMO before it has a chance to rebound abruptly as it did in 2009.

If you bagged any one of the Canadian banks in the depths of the Financial Crisis, you walked away with a very quick double and locked in an above-average dividend yield.

This time around, the circumstances are different. BMO and its peers are much better capitalized, and they’re no longer sitting at ground zero of the crisis. Despite this, they’re still being tossed out as though the 2020 coronavirus crisis is a repeat of the 2008 meltdown.

The move doesn’t make sense, especially for a premium Big Six name like BMO, which doesn’t deserve to trade at 0.96 times book.

If you’re looking to lock-in a massive 5.5% yield alongside what could be outsized capital gains, BMO is one of the best buys you’ll likely make this June.

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 Joey Frenette owns shares of BANK OF MONTREAL.

More on Dividend Stocks

data analytics, chart and graph icons with female hands typing on laptop in background
Dividend Stocks

Better Buy: Enbridge Stock vs. Telus

Enbridge and Telus are top TSX dividend stocks. Is one a better bet right now?

Read more »

Dividend Stocks

TFSA: How to Invest $88,000 to Get $5,450/Year in Passive Income

Top TSX dividend stocks such as Enbridge can be held in your TFSA to benefit from steady payouts and capital…

Read more »

edit Sale sign, value, discount
Dividend Stocks

3 Cheap Dividend Stocks (Down Over 30%) to Buy in January 2023

Given their discounted stock prices and high yields, these three cheap dividend stocks could be attractive for income-seeking investors.

Read more »

A worker drinks out of a mug in an office.
Dividend Stocks

TFSA Investors: Earn Passive Income With 3 Blue-Chip Stocks

TFSA investors can worry less about a recession and earn passive income with three blue-chip stocks as core holdings.

Read more »

Hourglass projecting a dollar sign as shadow
Dividend Stocks

Is Now the Right Time to Buy Consumer Discretionary Stocks?

Investors cannot paint consumer discretionary stocks with a wide brush. Each stock must be investigated individually. Here's why.

Read more »

Golden crown on a red velvet background
Dividend Stocks

2 Ultra-Stable Canadian Stocks Just Crowned as Dividend Aristocrats for 2023

Waste Connections (TSX:WCN) stock and another Dividend Aristocrat could help investors crush the markets in 2023.

Read more »

Golden crown on a red velvet background
Dividend Stocks

Create $200 in Passive Income Every Quarter From 1 Defensive Stock

Risk-averse investors can seek safety in a defensive stock and earn more in passive income in 2023 and beyond.

Read more »

railroad
Dividend Stocks

Slow and Steady: Buy this Railroad Stock Now to Win the Race

Investors looking for a solid and growing income should pick up shares in this railroad.

Read more »