3 Great Undervalued TSX Stocks to Buy Inexpensively

Market analysts don’t see the TSX’s rally in 2021 ending soon. For inexpensive, undervalued choices, the top picks are National Bank of Canada stock, Stingray Group stock, and Nuvista Energy stock.

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The TSX hit 20,000 for the first time on June 4, 2021, then posted multiple new highs. Investors are bewildered by the strong performance, while market analysts don’t expect the upward trajectory to stop soon.

Mike Archibald, vice-president and portfolio manager with AGF Investments, said, “Canada is going to be a good place to be for money.” He noted the market exhibits good momentum characteristics.  While the index is up 16.04% year to date, you can still find great, undervalued stocks to buy.

Strong buy

National Bank of Canada’s (TSX:NA) total return thus far in 2021 is +32.87, although the P/E ratio is only 12.32. It’s a sign that Canada’s sixth-largest lender is an undervalued investment. Suppose you invest today — the share price is $93.70, while the dividend yield is 3.03%.

Like its larger industry peers, this $31.62 billion bank reported stellar earnings in Q2 fiscal 2021 (quarter ended April 30, 2021). Net income grew 111% to $809 million versus Q2 fiscal 2020. Besides the significant increases in total revenues across most business segments, there was a substantial reduction in the provision for credit losses (PCLs).

National Bank’s president and CEO Louis Vachon cited the right strategic choices and diversified, agile franchise for the strong performance. He added that the bank continues to operate in an improving economic environment that’s conducive to business growth.

Smart buy

Stingray Group (TSX:RAY.A) is one of the smart buys in June 2021. Besides the 25% potential upside in the next 12 months, the $584.44 million music, media, and technology company pay a respectable 3.75%. The dividend stock is a steal at $7.97 per share. Note the trailing one-year price return is 47.32%.

In fiscal 2021 (year ended March 31, 2021), Stingray’s net income soared 229% versus fiscal 2020, notwithstanding the 18.7% decline in total revenues. Cash flow from operating activities also increased by 18.3% year over year. The only blot was the pandemic’s impact on radio revenues.

Even Stingray’s president, co-founder and CEO Eric Boyko was astonished by the very solid performance for the year. Notable highlights include a nearly $35 million reduction in debt, $22 million dividend payments, and $10 million buybacks of shares. For fiscal 2022, management expects solid incremental organic gains. Stingray is likewise on track to reach one million subscribers.

Must-buy

TMX Group lists Nuvista Energy (TSX:NVA) as an undervalued stock, given its ultra-low trailing P/E ratio of 1.17%. However, the under-the-radar energy stock is a high flyer with its 301.06% year-to-date gain. In addition, its trailing one-year price return is 333.33%.

Market analysts recommend a buy rating and forecast the current $3.77 to climb 59% to $6 per share in the next 12 months. The $851.43 million condensate and natural gas company develops, delineates, and produces condensate, oil, and natural gas reserves in the Western Canadian Sedimentary Basin.

In Q1 2021 (quarter ended March 31, 2021), management reported $15.39 million net earnings compared to the $788.7 million net loss in Q1 2020. As a result of increased production and commodity pricing, Nuvista’s cash flow reached $33.3 million during the quarter. The company expects to produce 50,000 to 52,000 Boe/d for the full year 2021.

Genuinely inexpensive

The share prices of National Bank of Canada, Stingray Group, and Nuvista Energy are genuinely inexpensive in June 2021. All three are great additions to any stock portfolio.

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 owns shares of and recommends Stingray Digital Group Inc. The Motley Fool recommends TMX GROUP INC. / GROUPE TMX INC.

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