The TSX Index just hit 20,000, and Canadian stocks are on a roll in 2021. Oddly enough, this strength is due to a market move from growth to value. Technology stocks that were massive winners from the pandemic are now stagnant or declining. In the inverse, cyclical and value stocks like energy, financials, and materials are leading the charge higher.
A barbell approach is best
I think it is important for TSX investors to have exposure to both sides of this trade. Growth stock valuations have improved and look intriguing for the long term. Yet owning exposure to shorter-term strength in value stocks also makes sense. Given this, here are four great TSX stocks that look attractive in June.
An under-the-radar TSX tech stock
For an undervalued technology play, I think Calian Group (TSX:CGY) is a great bet in June. It provides essential solutions and services for institutional clients. These include the likes of the Canadian military, the European Space Agency, and NATO. Over the past few years, this business has been transitioning from a dividend/income model to a growth story.
It has been working to diversify by solutions, customers, and geography. The company targets around 10% annual organic growth in all of its core segments. In addition, over the past year, it has also deployed $77 million into some very attractive acquisitions.
All of these acquisitions were at valuations far below its own market multiple. The company still has dry powder for further expansion. This TSX stock is cheap compared to peers, and for a stable growth stock, this is one to buy for the long term.
A new tech IPO
Telus International (TSX:TIXT)(NYSE:TIXT) is another growth stock Canadian investors might want to look at in June. This stock IPO’d in February, but it still trades 7.5% below its first day trading price. Yet the company has already demonstrated very strong results. In its first quarter, revenues were up 57% and adjusted EBITDA was up 90% year over year.
This TSX stock is a leading provider of digital customer experience solutions. It integrates cloud-based technology and data analytics/annotation to help the world’s largest tech firms improve their customer experiences. The future is digital, and Telus International is a leader in helping firms transition forward.
Consequently, not only is this stock fast growing; it garners very high margins and is very profitable. You don’t find such a combination often, and that is why I like this stock.
A TSX value stock winning from e-commerce
On the more “value” side of the trade, Intertape Polymer (TSX:ITP) is an interesting TSX stock. It produces and distributes tapes, wraps, and packaging solutions. It doesn’t sound that exciting upfront. However, when I tell you that it is growing at the same rate as e-commerce is growing in the U.S., that might pique your interest.
Intertape has been investing in its production capacity and product mix over the past few years. Now it can manufacture products at very attractive margins and keep up with increasing demand. In addition, in an inflationary environment, it is able to flow-through input costs largely to its customers. This stock pays a decent 2.5% dividend today. Yet it is Intertape’s attractive organic growth profile that makes this stock a winner.
A top energy producer
A more cyclical TSX stock that looks interesting is Suncor (TSX:SU)(NYSE:SU). While the stock is recovering nicely in 2021, it has not seen the same momentum as other energy peers. With energy prices more stable today, I believe Suncor is in a really good position. Transportation volumes are starting to increase across the world. As a result, Suncor should start to see margins improve in its refining business.
Likewise, Suncor spent 2020 reducing costs, finding operational efficiencies, and improving its balance sheet. Now its oil sands operations can produce a barrel of oil for less than $20. That means anything above that is gravy for the company. In its recent first quarter, it produced $2.1 billion in funds from operation. It paid off $1.1 billion of debt and bought back $300 million of shares. If commodities remain constant, this stock should have a nice recovery, as it keeps kicking out tons of free cash flow.