With stock market indices hitting record highs, it can be hard to find Canadian stocks that are still fairly priced. Yet, there are always dislocations in the market and opportunities if you think long-term. Here are four great Canadian stocks you can buy under $40 per share today. They each serve a different segment of the market and give investors diversity in their portfolio.
A utility growth stock
Algonquin Power (TSX:AQN)(NYSE:AQN) is a great Canadian stock for dividend income. The stock trades just around $20 per share and pays a 3.80% dividend. While this stock might be considered a boring utility, it still has a really attractive growth profile. It operates natural gas, water, and electric utilities, as well as a large renewable power segment.
Given that most of its operations are in the U.S, it will be a major beneficiary from the Biden infrastructure stimulus plan. Not only that, but it already has a $9.4 billion, five-year capital plan in motion. Management expects it should accrete 8-10% annual earnings growth over that period.
This isn’t including any future acquisitions or its 3.4 GW greenfield renewable power development pipeline. Combine these factors and there are lots of verticals for growth. Suddenly, this stock is not just a utility but an attractive growth story.
A Canadian pipeline stock
A slightly more risky Canadian energy stock is Pembina Pipeline (TSX:PPL)(NYSE:PBA). It trades just under $37 per share- near a 52-week high. However, that is still a 30% discount to where the stock was trading before the March 2020 oil crash.
The company’s growth program is certainly much smaller than prior. Yet, if oil stays in the $60 range, Pembina could absolutely see demand for its pipeline and midstream assets recover to pre-2020 levels.
In the meantime, the 6.9% dividend is well covered. This TSX stock is as safe as it gets in the oil sector. It has a great management team too. Over time it will prudently unlock growth projects as oil markets normalize. Consequently, its stock price should recover again.
A Canadian growth stock
Telus International (TSX:TIXT)(NYSE:TIXT) is a Canadian stock you can hold if you are looking for some elevated growth. It trades just below $36 per share. This company just IPO’d in February and is trading 10% below its first-day trading price.
Certainly, this Canadian stock is not exactly cheap. It trades with a forward price-to-earnings ratio of 30 times. Yet, this company grew revenues by 50% last year. For a technology stock, it is also very profitable and produces solid free cash flow.
It is a leader in digital customer experience services. Its IPO provided the capital to reduce debt and really double down on its growth program going forward. Given its growth profile, this stock still appears fairly priced.
A wine producer
Andrew Peller (TSX:ADW-A) is a top Canadian stock that’s likely not on your radar. It is the largest publicly-listed producer of wine and spirits in Canada. It trades just around $10 per share. For being such a prominent business, it only trades at a price-to-earnings multiple of 14 times.
However, the company has performed with resilience in and through the pandemic. For the first nine months of its 2021 year, sales, EBITA, and earnings per share grew 4%, 20% and 40%, respectively. Out of the pandemic, I expect Andrew Peller to see a rising demand for its premium, higher margin products.
Consequently, this Canadian stock could see an uptick in earnings and an improved earnings multiple. Combine those two elements and the market is only cracking the cork on this business today (sorry, pun intended).
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 Robin Brown owns shares of Algonquin Power & Utilities., PEMBINA PIPELINE CORPORATION, and TELUS International (Cda) Inc. The Motley Fool recommends PEMBINA PIPELINE CORPORATION.