Amid what has been a growth investor’s market of late, many investors have ignored valuation concerns in favour of seeking out growth at any price. Accordingly, we’ve seen what was already a wide gap between growth and value widen of late. Value stocks have underperformed relative to their growth counterparts, widening an already gaping valuation gap between growth and value to extreme levels.
That said, investors needn’t fear. The TSX happens to have a number of excellent value stocks to choose from. In this article, I’m going to discuss three top TSX value stocks investors should consider right now.
Let’s dive in.
Value stock: Kirkland Lake Gold
Indeed, gold miners haven’t been sexy for some time. Investors don’t seem to like the growth profile of precious metals miners, or their balance sheets and capital allocation practices for that matter.
That said, Kirkland Lake has shown itself to be one of the best miners on the market right now. The company’s otherwise pristine balance sheet, high margin production, and impressive cash flow generation are world-class. As far as gold miners go, this is perhaps the best stock in the world to consider right now.
For those bullish on gold, or simply seeking a portfolio hedge, Kirkland Lake is perhaps the best option right now. The company’s valuation multiple is dirt-cheap, at under 15 times earnings. Indeed, it’s hard to find such a gem on the market today, and I continue to pound the table on this name.
In the financials sector, Manulife (TSX:MFC)(NYSE:MFC) could be one of the best value picks among its peers. Indeed, this company’s valuation multiple of around 9-times earnings is also dirt-cheap. When one considers the fact that Canada’s big banks tend to trade around 12-times earnings, this valuation gap becomes even more impressive.
Yes, insurers are a completely different business from banks. And yes, insurance companies are still battling headwinds from the pandemic.
However, I view Manulife as one of the best-positioned insurers globally from a growth perspective. This company’s operations in Asia were recently enhanced by a further investment this past week. All indications are that Manulife stock is headed for good things on the horizon. Value investors should take note.
Alimentation Couche-Tard (TSX:ATD.A)(TSX:ATD.B) is another stock I’ve been pounding on the table recently.
Indeed, this top purveyor of convenience stores and gas stations is well-positioned as a pandemic recovery play. And as the company’s recent earnings show, things are already looking a lot better for this beaten-up name.
Investors who bought the dip in Couche-Tard as I recommended following its failed bid for French grocer Carrefour did very well for themselves. Indeed, this is a company with tremendous long-term potential, trading at only 15-times earnings. As far as value stocks go, this is a company with an overall excellent long-term growth profile.
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 stocks mentioned in this article. The Motley Fool owns shares of and recommends ALIMENTATION COUCHE-TARD INC.