Wherever the Market Goes, I’m Buying These 4 Under-$100 TSX Stocks

I am optimistic about four Canadian stocks that could generate healthy returns irrespective of where the stock market moves.

| More on:
Canadian Dollars

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Stretched valuations and challenges in vaccine distribution are leading many to believe that the stock market could crash. In contrast, I don’t expect the stock market to crash but would welcome a healthy correction. 

Further, I believe valuations will start to appear normal once the corporate earnings recover due to the revival of demand and economic expansion in the second half of 2021. As the stock market’s trajectory remains uncertain, I am optimistic about four Canadian stocks that could generate healthy returns in 2021, irrespective of where the stock market moves. 

Food retailer

Food retailer Loblaw (TSX:L) appears to be an attractive bet amid uncertainty. While tough year-over-year comparisons and deceleration in growth could pose challenges for retailers, Loblaw is likely to deliver strong same-store sales and earnings growth on the back of growing digital capabilities and its value offerings. 

The expansion of its click-and-collect services and home delivery offerings are likely to drive traffic and ticket size. Meanwhile, expanded online product offerings bode well for growth. Loblaw stock trades at a next 12-month P/E ratio of 13.4, which is well below Metro and Alimentation Couche-Tard’s forward multiple of 16 and 15.4, respectively.

Low-risk utility company 

Algonquin Power & Utilities’s (TSX:AQN)(NYSE:AQN) diversified and regulated utility business could continue to deliver strong gains irrespective of where the market goes. The company expects its rate base to increase at a CAGR (compound annual growth rate) of 11% through 2025, implying that it could continue to produce strong sales and EBITDA growth, which could drive its earnings and dividend payouts.

Besides capital appreciation, investors are expected to benefit from its robust dividend payouts. It has raised dividends at a CAGR of 10% over the past decade. Meanwhile, it could continue to increase it at a similar pace in 2021 and beyond, thanks to its high-quality and regulated earnings base. 

A gold mining company

Kinross Gold (TSX:K)(NYSE:KGC) is likely to add stability to your portfolio amid wild market swings. Its stock is too cheap to ignore at the current levels. Kinross Gold stock trades at the next 12-month EV/EBITDA multiple of 3.7, which is about 35% lower than its peer group average.

The company is expected to benefit from growing production volumes. Further, its costs are projected to decline over the next three years, thus supporting earnings and cash flows. Besides value and growth, Kinross Gold stock offers a decent yield of 1.8%. 

Commerce-enabling tech company 

While Lightspeed POS (TSX:LSPD)(NYSE:LSPD) stock significantly outperformed the broader markets in 2021, it remains well positioned to deliver strong returns in 2021 as well. The structural shift in selling models and increased spending on e-commerce provides a good growth opportunity for Lightspeed stock. 

I believe the demand for its omnichannel payment platform is likely to sustain, despite the easing of lockdown measures and an expected increase in activities in the physical stores and restaurants. Moreover, Lightspeed’s recent acquisitions, client base growth, geographic expansion, and up-selling are likely to drive its revenues and margins.

Bottom line

Wherever the market goes, these under-$100 TSX stocks are expected to deliver healthy returns in 2021. Their resilient business and positive secular industry trends are expected to drive demand and support the upside in shares.   

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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends ALIMENTATION COUCHE-TARD INC. The Motley Fool owns shares of Lightspeed POS Inc.

More on Dividend Stocks

Money growing in soil , Business success concept.
Dividend Stocks

Got $4,000? 4 Simple TSX Stocks to Buy Right Now

The macroeconomic environment is tense but investing can be simple. Here are four stocks to buy now and book your…

Read more »

Growth from coins
Dividend Stocks

What’s More Effective: 1 Growth Stock or 1 Dividend Stock for High Returns?

Let's settle the age old debate. If you had invested in a huge growth stock or a solid dividend stock,…

Read more »

money cash dividends
Dividend Stocks

Need a 2nd Income? 3 Stocks (With Monthly Dividends) to Buy and Hold

Need extra cash? These cheap Canadian stocks pay monthly dividends and are offering lucrative yield to start a passive-income stream.

Read more »

Gold king in chess game face with the another silver team on black background (Concept for company strategy, business victory or decision)
Dividend Stocks

2 Canadian Dividend Aristocrats to Buy in August

These two Dividend Aristocrats could help Canadian investors earn consistent passive income, even in difficult economic times.

Read more »

Increasing yield
Dividend Stocks

2 Canadian Stocks to Buy With Dividends Yielding More Than 3%

Investors can now buy top TSX dividend stocks at cheap prices for TFSA and RRSP portfolios focused on passive income…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

TFSA Investors: 3 Dividend Stocks That Pay You Monthly

Starting a monthly passive income from your TFSA won't just help with a few small routine expenses; it will also…

Read more »

The sun sets behind a high voltage telecom tower.
Dividend Stocks

BCE Stock: A Dividend Heavyweight That Could Take Share From Rogers

BCE (TSX:BCE)(NYSE:BCE) stock is a nearly 6% yielding behemoth that could skyrocket, as it takes share from rivals.

Read more »

data analyze research
Dividend Stocks

New Investors: 2 Great Long-Term Picks to Consider Today

New investors searching for long-term picks can consider adding these two TSX stocks to their portfolios.

Read more »