Over the last six months, stock indices have consistently ticked higher, as the economy continues to show positive signs of recovery. This is positive for investors, but, of course, the higher Canadian stocks move, the less likely you are to find high-quality companies trading cheap.
Fortunately, there are always high-quality investments to find. As the market rises, they just become harder to find. For savvy investors who know what they’re looking for in a long-term investment, though, it can be a little easier.
Having an idea of the companies, you appreciate ahead of time is key. This way, you know which companies to keep an eye on, and you’ll generally know what price you believe to be a fair purchase price.
This is a strategy that can work in all stages of the market cycle. Investors, of course, keep an eye on their own stocks, but watching your target stocks closely as well is key. That way, when they become undervalued, you can take advantage of the bargain and pull the trigger.
So, even if it seems like the market rally has gone on for a while and might be losing steam, there are always opportunities to consider. Here is one of the best opportunities today.
A top Canadian stock for value investors
If you’re a value investor, finding stocks to buy in a market rally can be especially difficult. One of the best ways to find these companies is to look for industries underperforming the rest of the market.
Over the past six months, almost every Canadian stock industry has been recovering and rallying. One of the worst-performing industries, though, has been gold. So, if you’re looking for value stocks, gold is one of the best industries to make a long-term investment in today.
Gold prices have suffered over the last few months, as long-term bond yields have been rising. This makes sense in the short term. However, it’s created some major opportunities for long-term investors.
Some top Canadian gold stocks, such as B2Gold (TSX:BTO)(NYSE:BTG), have been sold off excessively, and the resulting discount is offering a significant bargain.
B2Gold, specifically, is one of the cheapest gold stocks in the industry. This is a major opportunity, not just because it’s so cheap, but also because it’s one of the top Canadian gold stocks you can buy.
B2Gold is well known to have some of the lowest production costs in the industry. That means the company has strong margins, even if the price of gold is falling. Plus, when prices begin to rise again, the stock will have a tonne of upside potential.
The company has also been a top growth stock in the industry. B2Gold has consistently increased its annual production for over a decade now.
That growth in production combined with its low production costs has resulted in impressive free cash flow growth. The company is even returning cash to shareholders. Its dividend is quite significant for a gold stock too, currently yielding 3.6%.
Gold prices have sold off recently, and gold stocks have suffered as a result. This won’t last forever, though, and there are some top Canadian stocks, such as B2Gold, offering attractive discounts in the meantime.
So, if you’re looking for a high-quality, long-term stock to buy at a bargain today, B2Gold is one of the top stocks to consider.
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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 B2GOLD CORP.