TFSA Investors: 2 Under-the-Radar Stocks to Buy Today

TFSA investors should target stocks like Richelieu Hardware Ltd. (TSX:RCH) and DIRTT Environmental Solutions Ltd. (TSX:DRT)(NASDAQ:DRTT) in late August.

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The Canada housing market has roared back in June in July. Sales and prices have surged in the country’s major cities. Recently, I’d looked at some top housing stocks for investors to target as the real estate market has boomed. Today, I want to look at two under-the-radar stocks that are perfect for Tax-Free Savings Account (TFSA) investors. These stocks have some interesting links to housing and construction, which is why I’m watching them right now.

Why this stock is perfect for TFSA investors

Back in early June, I’d suggested that investors should target Richelieu Hardware (TSX:RCH). This company manufactures, imports, and distributes specialty hardware and complementary products in North America. Shares of Richelieu have climbed 34% in 2020 as of close on August 27. Moreover, it offers a modest dividend. This is a perfect equity for TFSA investors.

The company released its second quarter 2020 results on July 9. Sales and EBITDA fell 11.7% and 1.9%, respectively, compared to the prior year. However, in the year-to-date period diluted net earnings per share increased 4% to $0.52. Richelieu finished the second quarter with net cash of $31.2 million and working capital of $358 million – up 6.7% from the previous year.

Shares of Richelieu have surged in 2020, making it a dicey prospect for value investors. Its stock last had a price-to-earnings ratio of 30 and a price-to-book value of 3.5, putting Richelieu on the pricier side when it comes to value. I’m still bullish on this stock for TFSA investors in the long term. Value investors may therefore want to wait for a more attractive entry point.

This is one of the most exciting stocks on the TSX right now

DIRTT Environmental Solutions (TSX:DRT)(NASDAQ:DRTT) is one of my favourite stocks on the TSX today. The company designs, manufactures, and installs prefabricated interior solutions for use primarily in commercial spaces across various industries and businesses in the United States, Canada, and globally. Its shares have dropped 48% in 2020 as of close on August 27. However, the stock is up 52% month over month.

It released its second-quarter 2020 results on July 29. Unfortunately, the company did experience significant sales disruption due to the COVID-19 pandemic. Revenue fell to $42.2 million compared to $64.1 million in Q2 2019. There is still a lot to be excited about when it comes to this company and the industry at large. The interior design software market is positioned for big growth over the course of the next decade.

DIRTT’s earnings have slipped in 2020. However, the company still possesses a flawless balance sheet. TFSA investors on the hunt for value may not want to touch Richelieu, but DIRTT stock is a different story. Its shares last had a favourable P/B value of 1.2.

The stock is trading at the low end of its 52-week range. TFSA investors should be seeking out stocks that can post big capital gains by the end of this decade. DIRTT is an attractive prospect in the early 2020s.

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 Ambrose O'Callaghan has no position in any of the stocks mentioned.

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