Got $1,000 to Invest? 2 Cheap Stocks That Could Double by 2022!

Cheap stocks are still available in the market, and savvy investors who get in now could see significant gains over the coming months.

| More on:
Business success with growing, rising charts and businessman in background

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

The rally off the 2020 market crash has taken the TSX Index to new highs. Investors who missed the rebound are searching for cheap stocks that might still have decent upside potential.

Why Crescent Point Energy stock could soar

Investors who bought Crescent Point Energy (TSX:CPG)(NYSE:CPG) stock for $1 last year have chalked up some huge gains. At the time of writing, the shares trade for $5. The easy money has already been made, but more upside should be on the way if the oil bulls are correct.

Oil rallied from US$36 per barrel last fall to as high as US$66 in March and currently trades near US$63. The strong recovery and resilience of the oil market in the first part of 2021 caught many analysts by surprise. Coming into the year, most estimates called for an average price of about US$50 for the year.

Now, predictions for a jump to US$75 in the coming months are becoming more common. Some pundits even see oil spiking as high as US$100 in the next few years. The thinking is that a global economic boom will drive demand to the point where supply could get tight before global producers have a chance to ramp up output.

Crescent Point traded above $40 per share in 2014 when oil hit its last peak. The company has done a good job of selling of non-core assets in the past few years to get debt down to a manageable level. Crescent Point finished Q4 2020 with strong liquidity and is in good shape to benefit from rising oil demand.

Crescent Point expects to generate $600 million in excess cash flow in 2021 based on WTI oil averaging US$60 per barrel for the year. In the Q4 earnings report, the company estimated its net asset value to be $8.53 per share.

If oil prices take off, the stock could reasonably move a move back to $10, as investors flock back to the energy sector.

Why Kinross Gold looks like a cheap stock today

Kinross Gold (TSX:K)(NYSE:KGC) went from $20 per share in 2009 to $2 in 2015. The meltdown occurred after Kinross made expensive acquisitions near the top of the last gold boom that saddled the business with huge debt. In recent years, management slowly improved the balance sheet through asset sales. The company has also benefitted from rising gold prices.

Kinross generated US$1 billion in free cash flow in 2020 and finished the year with cash and cash equivalents of US$1.2 billion. Total debt was US$1.9 billion.

The board started paying a dividend, and management expects production to increase by 20% by 2023.

The stock now trades near $9 per share. That’s a multiple of just 7.6 times earnings. Kinross traded as high as $13 last summer when gold pushed above US$2,000 per ounce.

The gold rally took a break as bond yields soared, but the past few weeks have seen gold start to recover. Gold could catch a new tailwind as a hedge against inflation. A falling U.S. dollar should also support higher gold prices.

Kinross appears undervalued today, and a run to $18 wouldn’t be a surprise if gold breaks above the 2020 high.

The bottom line on cheap stocks

Crescent Point Energy and Kinross Gold have likely put their worst days in the rearview mirror and could deliver significant returns for new investors through the end of 2021 and into next year.

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 Andrew Walker has no position in any stock mentioned.

More on Energy Stocks

oil and natural gas
Energy Stocks

Better Buy: Suncor or Cenovus?

Suncor Energy Inc. (TSX:SU)(NYSE:SU) and Cenovus Energy Inc. (TSX:CVE)(NYSE:CVE) have soared in the year-over-year period.

Read more »

A stock price graph showing declines
Energy Stocks

2 Cheap Canadian Stocks That Likely Won’t Be on Sale For Much Longer

These two Canadian stocks are close to returning to all-time highs. Don’t miss your chance to take advantage of these…

Read more »

canadian energy oil
Energy Stocks

3 Rising Energy Stocks to Buy as Oil Hits 6-Month Low

Three rising energy stocks are strong buys today as their upward momentum is likely to continue due to the tight…

Read more »

Retirement plan
Dividend Stocks

4 Stocks That Could Turn $100,000 Into $500,000 by the Time You Retire

Companies such as Brookfield Asset Management have the potential to consistently beat the broader markets and deliver stellar returns to…

Read more »

energy industry
Energy Stocks

Vermilion Energy (TSX:VET) Stock Set to Soar Higher After a Solid Q2 Show

Should you buy VET stock?

Read more »

Gas pipelines
Energy Stocks

Unpopular Opinion: Oil Stocks Are Still Good

Oil prices are coming down, but oil stocks like Suncor Energy (TSX:SU)(NYSE:SU) are still good.

Read more »

Super sized rock trucks take a load of platinum rich rock into the crusher.
Energy Stocks

3 Top Commodity Stocks for Passive Dividend Income

Commodity stocks like Cameco Corp (TSX:CCO)(NYSE:CCJ) offer dividend income.

Read more »

Group of industrial workers in a refinery - oil processing equipment and machinery
Energy Stocks

2 Oil Stocks Under $11 With 90-110% Gains So Far This Year

Two small-cap oil stocks with enormous gains year to date are likely to deliver far superior returns in 2022 versus…

Read more »