TFSA Investors: A Rare Opportunity to Buy This Top TSX Stock for Dirt Cheap

You won’t want to miss the opportunity to get this ultra-cheap TSX stock with a nearly 8% dividend yield before it takes off.

| More on:
Value for money

Image source: Getty Images

2020 has been an eventful year for stock markets all over the world. Savvy investors who are able to eliminate the short-term noise and focus on buying long-term TSX stocks have been heavily rewarded.

Up until the coronavirus pandemic hit the global economy, markets had been on a lengthy bull run. So, when stocks crashed earlier this year and fell by massive amounts, it was one of the best opportunities in years for investors.

As markets recovered in the months that followed, many of these stocks returned to fair value eroding the bargains they offered investors back in March. Some stocks, however, have been missed by the market and remain dirt cheap.

TSX stocks still trading undervalue

At this point in the economic recovery, with the TSX index off its highs by just 8%, you have to be careful about which value stocks you’re buying.

Any stock that remains well off its highs is because the market has deemed it to still be considerably risky for whatever reason. A lot of that will have to do with its industry; however, it’s important investors recognize this increased risk.

There’s a good chance that many cheap stocks on the market today are value traps, which is why it’s even more crucial that investors do their homework before buying one of these dirt-cheap businesses.

TSX stock to buy today

If you want a solid TSX stock that’s trading ridiculously cheap, I would recommend investors consider Corus Entertainment (TSX:CJR.B).

Corus is a media content and entertainment company that owns television and radio assets. The majority of Corus revenue, however, comes from TV.

The company predominantly makes money in two ways. Firstly, through advertising selling commercial time to clients. The second way is through subscription services to either its specialty channels or its streaming service.

When the pandemic first hit, the fear was that Corus would lose a significant amount of revenue, as companies pulled their ad campaigns. The fear was compounded even more when investors became concerned that the company may have to trim its dividend.

So far, that hasn’t needed to happen. In the second quarter (the quarter with the most impact from the pandemic), the TSX media stock saw its revenue fall by just over 20%. Furthermore, the company still managed to earn a profit before tax. However, the free cash flow the company is still able to generate is what’s most appealing.

Dirt-cheap valuation

The stock is currently trading at a forward price to free cash flow of just 2.3 times. Furthermore, it’s trading at a forward price-to-earnings ratio of just 4.4 times. These ratios show just how cheap the stock is priced these days.

Right now, it’s all about weathering the storm for Corus. However, if it can continue to execute and keep its business in good financial shape, there is huge potential upside, as the economy continues to recover.

Finding TSX stocks trading at bargains this attractive is a rare opportunity. Moreover, when you consider Corus also pays a dividend that’s yielding roughly 8%, it quickly becomes apparent that Corus is the most attractive stock on the TSX.

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

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »

Payday ringed on a calendar
Dividend Stocks

3 Dividend Stocks That Pay Me More Than $54.57 Per Month

These three dividend stocks have done me well over the years, so let's look at how much I've gotten in…

Read more »