Buy These 3 Undervalued Stocks Before They Get Bid Up

Here are three stocks I think are too cheap to ignore at current levels that long-term investors should consider today.

| More on:
Value for money

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

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.

Alimentation Couche-Tard

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

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.

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.

More on Dividend Stocks

energy oil gas
Dividend Stocks

2 High-Yield Energy Stocks to Buy as Recession Approaches

Energy stocks such as TC Energy and Canadian Natural Resources allow investors to generate income even in recessionary times.

Read more »

green power renewable energy
Dividend Stocks

3 Top Dividend Stocks to Drive Your Passive Income

These three high-yielding, safe dividend stocks could boost your passive income.

Read more »

protect, safe, trust
Dividend Stocks

TFSA Wealth: How to Earn $363 in Monthly Passive Income for Life

Canadian investors can harness the power of the TFSA to generate steady tax-free passive income for decades.

Read more »

Canadian Dollars
Dividend Stocks

TFSA Millionaire: How to Turn $40,000 Into $1.2 Million for Retirement

Here's how TFSA investors are using the power of compounding to buy top Canadian dividend stocks to build retirement wealth.

Read more »

edit Balloon shaped as a heart
Dividend Stocks

My 3 Favourite TSX Stocks Right Now

These three TSX stocks are my favourite performers. All have strong dividends, future growth, and historic performance behind them.

Read more »

Dividend Stocks

Passive Income Generator: 1 Dividend Stock Yielding 6.16%

A high-yield energy stock that pays monthly dividends is a reliable passive income generator for investors.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

3 Cheap Canadian Dividend Stocks to Buy Now for Passive Income

Investors seeking quality passive income can now buy top TSX dividend stocks at cheap prices.

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

2 Oversold TSX Dividend Stocks to Buy for Passive Income

While these high-quality dividend stocks are oversold, they are some of the best stocks to buy for passive-income seekers.

Read more »