2 Top Canadian Value Stocks That Could Skyrocket Into Year’s End

Bausch Health Companies Inc.(TSX:BHC)(NYSE:BHC) and Bank of Montreal (TSX:BMO)(NYSE:BMO) are two Canadian value stocks to consider.

| More on:
stocks rising

Image source: Getty Images

Growth had its day in the limelight — now it’s time for top Canadian value stocks to shine. With the 10-year U.S. Treasury note yield surging, though, I expect value will continue to outshine growth going into year’s end. So, if you’re looking for market-crushing returns this year, it may be worthwhile to stick with the unloved Canadian stocks that I believe are likelier to skyrocket into the stratosphere by year’s end than the biggest 2020 winners, which could become 2021’s biggest losers.

Without further ado, let’s get into the top Canadian value stocks to buy ahead of the economic reopening. Consider Bausch Health Companies (TSX:BHC)(NYSE:BHC) and Bank of Montreal (TSX:BMO)(NYSE:BMO). The latter stock is for prudent investors looking to maximize their risk/reward, while the former pick is for more venturesome deep-value investors who are willing to risk it all for a shot at landing a grand-slam home run.

Icahn could make this stock iconic

Bausch Health should never have imploded the way it did back in the coronavirus crash. Shares have been surging back of late, thanks in part to legendary activist investor Carl Icahn, who recently announced his stake in the company. The man is no stranger to pushing for major change to unlock value for shareholders. And I think there are ample opportunities for the man to work his magic at Bausch.

With the incredible CEO Joe Papa at the helm, Bausch is in good hands as it continues to chip away at its debt load. With Icahn’s guidance, I believe Bausch stock is a must-buy while the Canadian value stock is still relatively cheap versus the likes of its peers.

Sure, the firm has a troubled history, but it’s moved on from that, with wonderful assets and a major eyecare spin-off that could create meaningful value for both the spinner and the spinee. BHC stock has been more volatile than the market, with its 1.55 beta, but at 1.5 times sales and 9.3 times cash flow, value investors have many reasons to ride the choppy Canadian health care play.

A top Canadian value stock to bank on

Things are looking up for the Canadian bank stocks of late. They’ve been soaring out of their 2020 lows, and thus far, they haven’t looked back. Bank of Montreal is one of my top bank stock picks at this juncture. Shares recently made a fresh all-time high, yet shares still look undervalued when you consider the likelihood that interest rates will rise within the next three years.

In any case, the steepening bond yield is good news for the big banks, who’ve been getting by on thin net interest margins (NIMs) for quite some time. With oil on the rise, BMO’s oil and gas (O&G) exposure isn’t nearly as rancid as it was a year ago when oil prices went on to flirt with negative territory.

BMO also boasts lower exposure to Canada’s bubbly housing market, making it a top value pick for bank investors who don’t are a tad worried about the possibility of a Canadian housing meltdown. BMO stock will still take a hit, but not nearly as much as some of its peers.

With a 3.8% yield to collect while you wait, BMO is an income, momentum, and value stock rolled into one.

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 Joey Frenette owns shares of BANK OF MONTREAL. Tom Gardner owns shares of Bausch Health Companies. The Motley Fool owns shares of and recommends Bausch Health Companies.

More on Stocks for Beginners

data analytics, chart and graph icons with female hands typing on laptop in background
Stocks for Beginners

2 Top Stocks to Buy in February 2023

Here are two of the best Canadian stocks you can buy in February 2023.

Read more »

Early retirement handwritten in a note
Stocks for Beginners

TFSA Investors: 3 TSX Stocks to Outperform the Market

Investors looking for major growth in TSX stocks for their TFSA in 2023 should certainly consider these three on the…

Read more »

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

Barrick Gold Stock Gained 15% in January—Is It a Buy Today?

Gold has gained 15% since October while Barrick Gold stock has gained nearly 30%.

Read more »

stream movies at home
Stocks for Beginners

Is Cineplex Stock Worth Buying in February 2023?

Is Cineplex stock worth buying? That's a question many investors still ponder. Let's try to answer that question.

Read more »

Question marks in a pile
Stocks for Beginners

Element Stock: Can This Top 2022 Gainer Keep the Momentum Going?

Up 53% in the last year, Element stock (TSX:EFN) could climb even higher, as it continues to take on clients…

Read more »

Young adult woman walking up the stairs with sun sport background
Stocks for Beginners

2 Dividend Stocks for Beginner Investors in February 2023

Dividend stocks aren't created equal. Here are two low-risk dividend stocks that beginner investors can consider in February 2023.

Read more »

calculate and analyze stock
Stocks for Beginners

4 Top TSX Stocks for Beginners in 2023

As a novice investor, your goal might be to invest in companies that offer a healthy mix of growth, safety,…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

These 3 TSX Stocks Are Set to Soar in 2023 and Beyond

These three TSX stocks are massively outperforming the TSX in 2023. Here's why they could continue to soar this year…

Read more »