2 Dirt-Cheap TSX Value Stocks Perfect for the Second Half of 2021

North West (TSX:NWC) and another top defensive stock that looks dirt cheap and ready to outperform the TSX Index in the second half of 2021.

| More on:
Choose a path

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 TSX was unstoppable in the first half. While the first-half performance is unlikely to be topped in the second half, I still think there are compelling TSX value stocks out there that can allow one to achieve relatively decent results in what could be a chopper market environment.

Undoubtedly, the pandemic isn’t over, and insidious variants of concern could outweigh Fed rate hikes and inflation woes going into year-end. With plenty of things to worry about, I think investors would be wise to place bets across a broad range of securities that will stand to do relatively well no matter what.

Here are two TSX stocks that are cheap enough such that any September or October correction is less likely to be as impactful as many of the pricier securities out there.

Alimentation Couche-Tard

Alimentation Couche-Tard  (TSX:ATD.A)(TSX:ATD.B) is a Quebec-based convenience retailer that could get more active heading into year’s end. The company has grown through prudent M&A over the decades, but of late, the firm hasn’t been nearly as active as most investors would have liked. It’s not for lack of trying, though.

Couche-Tard has enough cash and credit to make its biggest deal to date. It just hadn’t had much luck in the way of regulatory approval, especially when it came to French grocer Carrefour.

Now, I have no idea when the company will pull the trigger or if investors will like it (they hated Carrefour). I do think there’s a margin of safety with the depressed valuation, though. For that reason, I’m inclined to buy at $45 and change. With a 0.9 beta and a modest multiple, Couche-Tard looks poised to weather any second-half correction far better than most other TSX stocks out there.

North West Company

North West (TSX:NWC) is a retailer that serves remote communities that typically lie outside of the reach of most other retailers. Serving the underserved localities comes with its advantages. Most notably, distance serves as an essential moat component for the firm.

As you’d imagine, transporting and selling goods in remote regions can be pricy. And for that reason, many other big-name retailers would probably be less willing to make the investments to get in on North West’s turf.

Moreover, North West seems more immune to any rise in e-commerce. While there could be more pressure in the future, I view North West as being one of the safer traditional retailers out there.

Today, the stock commands a juicy 4% dividend yield alongside a low 0.5 beta. Both the handsome payout and the low correlation to the broader equity markets will allow North West shares to hold their own in the next market-wide scare. With the modest valuation (10.6 times trailing earnings and 0.7 times sales), which I believe gives the stock a nice margin of safety, NWC shares are more likely to be in the green on a big day in the red.

Moreover, if another COVID-19 outbreak strikes, North West is too essential to close its doors. As such, North West is shaping up to be one of the better defensive plays out there right now.

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 Joey Frenette owns shares of ALIMENTATION COUCHE-TARD INC. The Motley Fool owns shares of and recommends ALIMENTATION COUCHE-TARD INC. The Motley Fool recommends THE NORTH WEST COMPANY INC.

More on Dividend Stocks

funds, money, nest egg
Dividend Stocks

TFSA Passive Income: 2 Great Canadian Dividend Stocks for Retirees to Buy Now

Retirees seeking reliable passive income can now buy top TSX dividend stocks at cheap prices.

Read more »

data analyze research
Dividend Stocks

Earn Monthly Passive Income: 2 Hot Dividend Stocks in Canada to Buy Now and Hold Forever

These two hot dividend stocks could help you to earn stable monthly passive income in Canada.

Read more »

Human Hand Placing A Coin On Increasing Coin Stacks In Front Of House
Dividend Stocks

Be a Landlord: Top 2 REITs (With Monthly Dividends) I’d Buy and Forget

You can be a landlord and earn monthly dividends for the rest of your life. All you need is the…

Read more »

A worker gives a business presentation.
Dividend Stocks

Got $5,000? 3 Stocks to Hold for the Next 20 Years

New investors don’t need tens of thousands to start a portfolio. Here are three stocks to hold for the next…

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

Earn $370 Every Month with These 3 Dividend Stocks

These three Canadian dividend stocks could boost your passive income.

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Dividend Stocks

3 Dividend Stocks to Buy Hand Over Fist

Investing in dividend stocks could help you reach a comfortable retirement. Here are three stocks to start buying hand over…

Read more »

Retirement plan
Dividend Stocks

4 Stocks That Could Turn $100,000 Into $500,000 by the Time You Retire

Companies such as Brookfield Asset Management have the potential to consistently beat the broader markets and deliver stellar returns to…

Read more »

money while you sleep
Dividend Stocks

Need Passive Income? 2 TSX Stocks to Earn $500/Month Without Losing Sleep

By investing in Enbridge and Keyera stock, investors can make $500/month.

Read more »