2 Top TSX Undervalued Stocks to Buy Right Now

The search for undervalued stocks is on, and Alimentation Couche-Tard (TSX:ATD.B) and Kirkland Lake Gold (TSX:KL)(NYSE:KL) are top picks.

| More on:

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

The focus on finding undervalued stocks is on. Indeed, in this market, which has seen some volatility today amid what appears to be risk-off sentiment, this shift could be accelerated in the near term. Accordingly, those seeking safe places to hide are increasingly looking at value picks.

That said, there doesn’t happen to be a wide variety of value stocks on the market today. Few are trading at valuations that remain attractive right now. However, there happen to be a few Canadian stocks that fit this profile nicely.

Let’s dive into two of the top value picks every long-term investor should consider today.

Undervalued stocks: Alimentation Couche-Tard

Alimentation Couche-Tard (TSX:ATD.B) has been one of my top value picks for some time.

Indeed, this company’s valuation speaks volumes. Currently, Couche-Tard trades at a rock-bottom multiple of less than 15 times earnings. Given this company’s growth profile, that’s extremely cheap on a historical basis. Compared to some of the other growth sectors such as technology, this valuation is unheard of.

Sure, gas stations and convenience stores aren’t necessarily a “sexy” business to invest in. However, Couche-Tard has proven it’s a company with a business model that works. Via years of consolidating this sector, Couche-Tard has been able to build synergies and economies of scale that are impressive. Long-term investors who have trusted their capital to Couche-Tard’s management team have done very well. I expect this situation to continue.

Additionally, the value Couche-Tard provides as a pandemic reopening play cannot be understated. As the economy reopens and commuters get back to doing their thing, Couche-Tard’s business provides nice cyclical upside to this trade. Now appears to be a great time to consider shares of this $50 billion market cap company.

Kirkland Lake Gold

The gold mining space has traditionally been one filled with high-quality value stocks. Indeed, the valuations of these gold miners relative to the historical price of gold leaves quite the valuation gap to be exploited.

For investors looking at Canadian gold miners, Kirkland Lake Gold (TSX:KL)(NYSE:KL) is one of the best in this space. The company’s high-grade production, and high margins provide serious cash flow stability today. While the average price of gold is likely to be lower this year than last, it’s also true that Kirkland Lake is raising production. I expect top- and bottom-line increases from this company in the near-term, with outperformance likely in the medium to long term.

With bond yields coming down, real yields have become even more negative. For gold and gold miners, this is a good thing. However, given the broad-based selloff today, everything is down. This is the kind of buying opportunity for companies like Kirkland Lake that’s worth exploring.

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.

More on Dividend Stocks

stock research, analyze data
Dividend Stocks

RRSP Investors: 1 Cheap TSX Dividend Stock to Buy Now and Own for 35 Years

RRSP investors can still find top TSX dividend stocks to buy at discounted prices.

Read more »

Cogs turning against each other
Dividend Stocks

2 of the Safest Stocks (With Dividends) to Buy in Canada Now

Here are two of the safest stocks investors in Canada can buy now.

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

2 Top Canadian Value Stocks Worth Buying Right Now

Here's why Alimentation Couche-Tard (TSX:ATD) and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) are two top value stocks to consider right now.

Read more »

Happy shoppers look at a cellphone.
Dividend Stocks

2 Bargain Stocks You Can Buy Today and Hold Forever

Here's why Fortis (TSX:FTS)(NYSE:FTS) and Manulife (TSX:MFC)(NYSE:MFC) are two bargain stocks I think are worth considering right now.

Read more »

Retirement plan
Dividend Stocks

Passive Income: How Canadian Couples Can Earn $747 Tax-Free per Month for Life

Canadian couples can take advantage of their TFSA contribution space to create a significant stream of tax-free passive income.

Read more »

Golden crown on a red velvet background
Dividend Stocks

3 Canadian Dividend Aristocrats to Buy for Passive Income Forever

Passive-income stocks like BCE (TSX:BCE)(NYSE:BCE) should be on your radar.

Read more »

potted green plant grows up in arrow shape
Dividend Stocks

4 High-Growth Stocks I’d Buy Before the Summer Ends

Top growth stocks like Park Lawn Corporation (TSX:PLC) and others are well worth picking up even as the Canadian market…

Read more »

stock data
Dividend Stocks

2 Top Canadian Dividend Stocks to Buy Now for a Self-Directed RRSP

RRSP investors can still find top TSX dividend stocks trading at cheap prices to buy for a self-directed portfolio focused…

Read more »