Got $1,000? Buy These 3 Undervalued Gems Today

Here are three of my top picks for investors seeking value right now.

| More on:
Choose a path

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

In these otherwise overvalued markets, it can certainly be difficult to find winners. Indeed, stocks remain above historical averages, boosted by continued near-record-low interest rates.

However, there are certain companies that do represent great value today. Among the top picks I think investors should consider are the following three companies.

Alimentation Couche-Tard

Alimentation Couche-Tard (TSX:ATD.A)(TSX:ATD.B) is one of the first names which come to mind when considering undervalued stocks. Trading at nearly 15 times earnings provides an intriguing entry point for value-based investors.

In the case of Couche-Tard, the company’s growth-by-acquisition strategy has taken a slower pace of late. Accordingly, the market has turned sour on this former growth gem. A failed bid for French retailer Carrefour and a lack of deal flow has made the investment thesis difficult for this stock of late.

However, I believe Couche-Tard’s decision to wait and see in the markets is a good one. The company’s management team is known to be ultra-prudent with its acquisitions. It doesn’t overpay for deals. Accordingly, long-term investors with faith in Couche-Tard’s team should simply sit and wait on this one.

Additionally, as a pandemic reopening play, there’s much to like about Couche-Tard. It has a number of catalysts in its corner, which I see materializing shortly.

Kirkland Lake Gold

As gold takes off above $1,900 per ounce today, investors may think now is not the time to get into the gold mining space. I disagree.

World-class miners like Kirkland Lake Gold (TSX:KL)(NYSE:KL) are still cheap. In fact, on a relative historical basis, miners haven’t been this cheap in a very long time.

There are reasons for this. Decades of historically poor capital allocation have put gold miners in the penalty box. Investors appear to be cautious with these equities given the rise in gold of late. Indeed, gold prices have been on an upward trend, but there are those who believe other hedges do a better job in this environment.

That said, Kirkland Lake’s valuation of only 16 times earnings is enticing. This gold miner also provides investors with a 1.8% dividend, further attracting long-term investors to this name.

I think the company’s high-quality mines and sky-high operating margins will eventually result in this stock shooting higher. It’s just a matter of time.

Manulife Financial

In the financials space, Manulife Financial (TSX:MFC)(NYSE:MFC) remains one of the top value options today.

Manulife is one of the heavyweights in financial protection and wealth management services, operating in over 20 countries. It’s a company with a sizeable footprint in Asia and carries tremendous long-term growth potential. Currently, it’s trading at a discount of roughly 20% to many of Canada’s big banks.

Sounds like a good deal to me.

Insurers like Manulife may battle interest rate headwinds for some time. But for now, picking up shares of such companies while they’re cheap makes all the sense in the world.

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

Volatile market, stock volatility
Dividend Stocks

2 Dividend Stocks to Own When the Market Is in Turmoil

Two TSX stocks can sustain dividend payments, even if the present market turmoil extends longer than expected.

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Passive-Income Stocks to Help You Through This Market Correction

These three passive-income stocks offer stellar dividends around 6% to help get you to the other side of this market…

Read more »

Coworkers standing near a wall
Bank Stocks

Policy Rate: 2 More Hikes After July 2022 to Reach Neutral Level

The Bank of Canada might need three more rate hikes beginning in July 2022 to reach neutral levels.

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

3 Undervalued Dividend Stocks to Buy Right Now

Dividend-paying stocks such as Bank of Montreal offers investors the opportunity to generate outsized gains in the next year.

Read more »

Businessperson's Hand Putting Coin In Piggybank
Dividend Stocks

RRSP Dividend Investors: 2 Top Oversold TSX Stocks to Buy for Total Returns

RRSP investors can pick up top TSX dividend stocks at cheap prices today and get a shot at some attractive…

Read more »

analyze data
Dividend Stocks

2 Safe Dividend Stocks That Could Help You Fight Inflation

A dependable stream of passive income is one way to help offset rising inflation rates. Here are two top dividend…

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

Stay Invested in a Recession: Increase Positions in 2 Value Stocks

The suggestion of market analysts is to increase positions in two value stocks if you want to stay invested amid…

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Dividend Stocks

3 Dividend Stocks to Buy as Inflation Surges in Canada

If you're worried about how surging inflation may impact your portfolio, here are three of the best dividend stocks to…

Read more »