2 Bargain Stocks to Pile Into Before They Go up

Investors have bargain deals in Suncor Energy stock and Kinross Gold stock. Both have stunning upside potential, so it’s an excellent time to load up before their prices soar.

| More on:
Value for money

Image source: Getty Images

The Toronto Stock Exchange (TSX) continues to trend positively in June 2021. According to Philip Petursson, Manulife Investment Management’s chief investment analyst, historically, the TSX performs well when oil markets do well. His observation is on point, because the energy sector is the top-performing sector thus far in 2021.

Besides energy, the healthcare, financial, real estate, consumer discretionary, and telecommunications sectors are outperforming the TSX. The broader market is outperforming only five sectors, although all of them are in positive territory. Despite the index’s remarkable advance, investors can still find bargain deals and pile into them.

Suncor Energy (TSX:SU)(NYSE:SU) and Kinross Gold (TSX:K)(NYSE:KGC) appear undervalued and are bargain deals today, if you carefully review their business outlooks. Their breakouts could be coming soon.

Look to the future

The past is past for Suncor Energy. The energy stock performs better than expected with its 44.4% year-to-date gain. Because of fresh optimism, market analysts forecast the price to soar by as much as 31.7% to $40. Suncor also pays a 2.77% dividend.

The $45.75 billion integrated energy company seems ready to regain lost glory now that the rebound of oil prices is on. Also, don’t mistake Suncor for an old-school oil major, because it pioneers high-tech solutions in the industry. It uses technology to find, pump, store, and deliver resources.

Suncor invests heavily in renewable energy innovations too. It has a $300 million stake in a wind farm in Alberta. Soon, the company will capitalize on lithium — one of the country’s valuable resource reserves. The oil sands in Alberta are rich in lithium, so it could be a hotspot if production starts.

Last, Canada’s five largest pension funds increased their investments in major oil sands companies, including Suncor Energy, Q1 2021. Some industry observers believe the investments by these fund managers in fossil fuel producers will pave the way for the transition towards cleaner energy.

Consistent profitability

Kinross Gold flies under the radar, although it might upstage the bigger Barrick Gold in 2021. The potential upside should be stunning if it continues to report consistent profitability and improved cash flows. The $12 billion senior gold mining company boasts a diverse portfolio of mines and projects.

Management banks on the company’s operational excellence, balance sheet strength, disciplined growth, and responsible mining to deliver value. The mines in Fort Knox and Nevada in the U.S., plus the one in Peru, account for half of Kinross’s total production. Its exploration strategy focuses on high-quality brownfield projects, where it expects to discover new resources within the existing footprint or mines.

In Q1 2021 (quarter ended March 31, 2021), revenue and adjusted net earnings increased by 12% and 51% versus Q1 2020. Notably, attributable margin per gold equivalent ounce sold increased by 25%. The result outpaced the 13% year-over-year increase in average realized gold price.

Industry experts list Kinross as one of the best-valued gold stocks today. The current share is $9.52, while the dividend yield is 1.53%. Market analysts see a potential climb to between $13.73 (+44%) and $18 (+89%) in the next 12 months.

Capital gain plus recurring income

Suncor Energy and Kinross Gold are stalwarts in their respective sectors. Besides the potential capital gains, prospective investors will derive recurring income streams from these dividend payers. Initiate a position now before the stocks break out.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »