With a growth-to-value rotation in progress, now is as good a time to seek stocks that are undervalued today.
It just so happens that the TSX has a few great value picks today. Among those I think have the best growth potential and long-term outlook are these three gems.
So, let’s dive into it.
I have been tracking the performance of Alimentation Couche-Tard (TSX:ATD.B) for quite some time. Indeed, this stock continues to be one of my top picks, despite moving sideways for the past couple years.
Couche-Tard continues to trade at a multiple I view as unreasonably low. This company’s got a track record of growing via a string of acquisitions, which I don’t think will abate anytime soon. Nevertheless, the market has assigned Couche-Tard with an incredible multiple of only 14 times earnings right now.
At these levels, that’s dirt cheap.
As Couche-Tard continues to consolidate the fragmented gas station business and grow its footprint globally, this stock should outperform long term.
Corus Entertainment (TSX:CJR.B) is an oft-overlooked value stock due in part to its declining revenues in recent years. Indeed, traditional media isn’t the place investors want to be, and more and more focus is being placed on streaming options today.
However, there is some light at the end of the tunnel for value investors. Corus has been ramping up its digital and streaming operations. This segment now accounts for 10% of its total revenue and is growing fast.
Additionally, the company has recently announced some intriguing moves in this space. I’m keeping my eye on this company, which I see as a potential cash flow cow to be milked over the long term.
Yes, Corus is cheap for a reason. However, at some level, every stock deserves a second look. I think Corus has hit this level.
Chartwell Retirement Residences
Chartwell Retirement Residences (TSX:CSH.U), the largest housing provider for seniors in the country, has made a strong recovery over the past few months. However, it is still more than 10% off pre-pandemic levels. This company continues to face various obstacles owing to the pandemic.
That said, with the resumption of economic activities on the horizon, this stock might reward those who are willing to take a position during these times. Indeed, this is one of the most underrated reopening plays on the TSX today. For quite some, Chartwell has been dealing with low occupancy rate (82%), which is below its historical average.
However, I believe that there’s a lot of pent-up demand for assisted living. As the vaccination rollout accelerates in Canada, this company will be a direct beneficiary. I think investors that are looking for value and are willing to accept a dividend yield around 5% while they are patient have a very decent long-term pick in Chartwell.
Like these undervalued picks? Here are a few more we think are undervalued at the Fool:
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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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends ALIMENTATION COUCHE-TARD INC.