1 TSX Value Stock to Watch This Week

This TSX value stock is reporting earnings this week and investors will be watching carefully to see the impact coronavirus has had on operations.

| More on:
edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.

Image source: Getty Images

Investing in TSX value stocks is one of the best long-term strategies. However, because of this, many value stocks never end up getting that cheap, as savvy investors buy them before they can ever get super undervalued.

Those stocks that do look super undervalued are often those with the most risk, making them likely value traps.

This makes it very difficult to find high-potential value stocks. Investors need to find a stock that the market thinks has more risk than is actually present. If you can do this consistently, you may still get burned sometimes, but the majority of your investments will provide massive returns.

One of the best value stocks on the TSX today looks to be Corus Entertainment Inc (TSX:CJR.B)

Corus’ past performance

Over the past few years, Corus has overcome several headwinds. High debt loads and a maturing industry caused a major sell-off just a few years ago.

The company’s debt was getting out of hand, and with advertisers leaving T.V. for new platforms to reach audiences (such as social media), investors were very concerned with the future outlook of Corus’ business.

This resulted in Corus slashing the dividend considerably, launching the company’s long turnaround.

Since then, Corus has paid down a significant amount of debt. Its business segments are much stronger and more opportune, including its rapidly growing content creation segment.

In addition to Corus executing its turnaround well and having a great long-term business model, advertisers have also started returning to T.V.

T.V is still one of the best ways for advertisers to target specific audience groups. Plus, with Corus’ portfolio of specialty channels, the company takes it a step further, offering investors numerous demographics for advertising.

COVID-19 impact on the TSX

The impact of coronavirus on Corus’ business is the main thing for investors to look for when the company reports earnings this week.

In its second quarter of fiscal 2020, Corus saw a 2.1% decrease in revenue compared to the same quarter a year earlier. Despite that, it managed to record a 61% increase in earnings per share.

However, the quarter was ending as coronavirus was just beginning, so the results this week should be a better reflection of the impact Corus has witnessed.

The TSX stock remains cheap today because investors are worried the drop-off in revenue could be extreme. Traditionally recessions have a significant impact on advertising dollars. However, this pandemic is considerably different.

Some companies have stopped advertising altogether, while others have increased their ad campaigns. And all this has been going on while more people have been stuck at home. This is what’s led to rapidly increasing viewership.

One thing for investors that does look positive going into these earning is that management didn’t trim the dividend earlier this month when it issued it.

This is important because management deferred this decision during the last earnings, wanting to see how bad the impact the virus had. So the move to keep the dividend intact should be seen as a positive. As whatever impact there has been, management clearly believes that it’s manageable.

Corus is one of the top value stocks

When looking at Corus’ price from a trailing earnings perspective, the TSX stock is exceptionally cheap, trading at just 4.1 times earnings. However, with investors worried about earnings taking a meaningful hit, this could be irrelevant.

What isn’t irrelevant is its price to book ratio, which highlights just how cheap the stock is. Over the last five years, Corus has had an average price to book of 0.85 times. Today its price to book is just 0.45 times.

The stock is trading extremely cheap, plus the dividend yield is monstrous. As of midday Tuesday, Corus’ stock was yielding more than 6.5%.

Bottom line

Corus is one of the top value stocks on the TSX. When it reports earnings this week, investors will be watching. And if the impact from coronavirus is less than what’s been expected, look for the stock to skyrocket.

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 Daniel Da Costa owns shares of CORUS ENTERTAINMENT INC., CL.B, NV.

More on Dividend Stocks

Electric car being charged
Dividend Stocks

2 Growth Stocks to Buy Before a Big Rally

Despite market volatility persistently plaguing the market, these two TSX stocks might be worth considering right now to prepare for…

Read more »

financial freedom sign
Dividend Stocks

2 Cheap TSX Stocks That Could Make You Rich

Keep these two cheap TSX stocks on your radar if you seek immense wealth growth potential for your self-directed portfolio.

Read more »

Increasing yield
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Won’t Regret Owning in 2023

Buy these monthly dividend stocks now with insanely high yields and look forward to immense growth by the end of…

Read more »

funds, money, nest egg
Dividend Stocks

The Best Way to Make $1 Million When a Bull Market Returns

Here are five quality TSX stocks investors can buy and hold for the long term, allowing them to increase their…

Read more »

Gold medal
Dividend Stocks

3 Undervalued Winners Just Begging to Be Invested in Today

Three undervalued stocks from three underperforming sectors are winners and screaming buys today.

Read more »

Man data analyze
Dividend Stocks

3 Top Dividend Stocks I Can’t Wait to Buy in 2023

Top Dividend Aristocrats are worth buying in almost every market, especially if you hold them long term. However, weak markets…

Read more »

financial freedom sign
Dividend Stocks

Buy 2,911 Shares in This TSX Stock for a Shot at $1 Million in 32 Years

You might not see insane growth overnight, but you won't see insane drops either from this TSX stock offering a…

Read more »

Dividend Stocks

A Dividend Heavyweight I’d Buy Over Enbridge Right Now

BCE Inc. (TSX:BCE) is a dividend heavyweight I prefer over Enbridge Inc. (TSX:ENB) due to its value and impressive income…

Read more »