This month, the TSX Composite Index has been under pressure, with technology stocks taking a more significant hit. Meanwhile, the growing number of coronavirus cases and weak economic indicators could drive the equity markets further down. So, it is a good time to invest in value stocks, which can strengthen your portfolio.
Here are the three value stocks trading under $10, but could deliver impressive returns over the next three to five years.
My first pick would be Aphria (TSX:APHA)(NASDAQ:APHA), which has lost over 9% of its value this year. In its recent quarter, its net losses came in at $98.8 million, which weighed heavily on its stock price. Meanwhile, a significant chunk of those losses was one-time or non-recurring.
Further, the company had reported top-line growth of 5% on a sequential basis, while its adjusted EBITDA grew over 49%. The company has planned to introduce two more brands this fiscal year, which could increase its market share.
In the international markets, the company is working on expanding its German operations. The company’s Malta-based subsidiary received European Union Good Manufacturing Practices certification in the last quarter, which could boost its sales in the EU region.
Given its strong growth prospects, the company could deliver impressive returns over the next three to five years.
B2Gold (TSX:BTO)(NYSE:BTG) is second on my list, which has delivered over 70% of the returns this year. Despite its impressive performance, the company has underperformed its peers.
The surge in gold prices and higher production levels drove the company’s second-quarter performance. Its adjusted revenue increased by approximately 65%, while its adjusted EPS grew by over 100%. The company’s management had stated that its operations in Mali were unaffected despite the demonstrations and political unrest.
Further, the company is working on expanding its mining operations in the country. So, the company’s production levels could increase.
Meanwhile, amid high volatility in the equity markets, lower interest rates, and increased liquidity, I expect gold prices could rise further, which could benefit the company. Last month, the company had announced quarterly dividends of $0.04 per share. So, its forward dividend yield stands at 1.8%.
Given the favourable gold prices, increased production, and healthy dividend yield, B2Gold provides an excellent buying opportunity.
My third pick would be a tech company, BlackBerry (TSX:BB)(NYSE:BB), which has lost over 23% of its stock value this year. The disruptions to its end markets, such as the automotive sector, have dragged the company’s stock down. However, with the resumption of production, the automotive industry is beginning to show some recovery.
Meanwhile, with more people preferring to work, learn, and shop remotely, cyberattacks could rise. Also, cyberattackers are increasingly becoming more sophisticated. So, the spending on cybersecurity could increase in the years ahead.
Gartner has projected the cybersecurity business to reach US$190 billion by 2023, with endpoint security contributing US$56 billion. Last year, BlackBerry had strengthened its end-to-end secure communications portfolio by acquiring Cylance. So, the company could benefit from the increased spending on cybersecurity.
Further, the company plans to launch its next-generation 5G Android phones in the first half of 2021 in association with OnwardMobility. So, the company’s growth prospects look strong. Also, the company has sufficient liquidity to ride out this crisis. So, I am bullish on the stock.
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The Motley Fool recommends BlackBerry and BlackBerry. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.