3 Cheap Stocks to Buy in August

Canadians should consider snatching up cheap stocks like Canopy Growth Corp. (TSX:WEED)(NYSE:CGC) and others in early August.

| More on:

The S&P/TSX Composite Index fell 23 points on July 30. Canadian markets will reopen after the long weekend today. The pullback in July has revealed some anxiety among investors in the face of the rising Delta variant. As always, this is a great time to look for discounts. Today, I want to look at three cheap stocks that are worth adding in early August. Let’s jump in.

Why Kinross and other gold stocks are undervalued

In early July, I’d discussed why gold stocks looked discounted. That is still my stance today as we face down an uneasy recovery and higher-than-expected inflation.  Kinross Gold (TSX:K)(NYSE:KGC) remains one of my favourite cheap stocks in this space. Its shares have dropped 20% in 2021 as of close on July 30. The stock is down 36% from the prior year.

In Q1 2021, Kinross reported that it was on track to meet its annual guidance. Adjusted net earnings rose 51% year over year to $192 million or $0.15 per share. Meanwhile, the board of directors declared a quarterly dividend of $0.03 per common share. That represents a modest 1.8% yield. This cheap stock last had a very favourable price-to-earnings ratio of 6.4.

Here’s a cheap stock I’d buy in the cannabis space

Canopy Growth (TSX:WEED)(NYSE:CGC) is one of the largest cannabis producers in Canada. Indeed, it still maintains the number one market share in the total flower category. This cheap stock has dropped 29% in the year-to-date period. Shares of Canopy Growth are down 8% year over year.

Last month, I’d discussed whether Canopy Growth was set for a big boost as leading Democrats begin to explore a path to recreational legalization in the United States. Unfortunately, no breakthrough appears to be forthcoming. That does not mean Canopy Growth should be ignored, however. The company expects to deliver positive adjusted EBITDA by the second half of fiscal 2022.

Investors can expect to see Canopy Growth’s next batch of earnings in the first half of August. In Q4 FY2021, the company achieved revenue growth of 38% to $148 million. Canopy Growth also saw an improvement in its cash position to $2.3 billion.

One more cheap stock that produces precious metals to snatch up

Silver prices soared with gold in the first half of 2020. However, it has softened and stagnated over the past year. It is well-positioned to benefit from the same bullish conditions that should drive investors to gold. First Majestic Silver (TSX:FR)(NYSE:AG) is a Vancouver-based company engaged in the acquisition, exploration, development, and production of mineral properties with a focus on silver and gold production. Shares of this cheap stock have dropped 6.2% in 2021.

First Majestic delivered revenue growth of 17% to $100 million in the first quarter of 2021. Net earnings came in at $1.9 million – up from a net loss of $32.4 million in Q1 2020. Mine operating earnings increased 33% to $28.1 million.

Shares of First Majestic are trading in favourable territory relative to industry peers. The cheap stock slipped into technically oversold territory in late July. It is not too late to snatch up First Majestic on the dip.

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 Ambrose O'Callaghan has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Investing

Retirees sip their morning coffee outside.
Dividend Stocks

Turn Your TFSA Into a Fund for a Comfortable Retirement

A calculated, well-disciplined, and smart approach to TFSA investing can help you turn the account into a way to fund…

Read more »

Asset Management
Stocks for Beginners

How to Build a $40,000 Investment Portfolio That Requires Minimal Maintenance

Building an investment portfolio can't be easier than this. Simply dollar-cost average into XEQT for equity exposure and long-term wealth…

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

Want Decades of Passive Income? 3 Stocks to Buy Now and Hold Forever

These TSX stocks have paid and increased their dividends for years and are well-positioned to pay higher dividends in future…

Read more »

dividend growth for passive income
Investing

Why Investing $5,000 in These Growth Areas Makes Sense Now

Investing in growth areas least impacted by U.S. tariffs can deliver substantial financial windfall.

Read more »

hand stacks coins
Dividend Stocks

How to Allocate $30,000 for Both Current Income and Future Growth

Are you wondering how to earn income and grow your capital (at the same time)? These three quality TSX stocks…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

Need $1,000 Each Month? How Much You Need to Invest in a TFSA

Want income and growth? Then consider these three options analysts continue to drool over.

Read more »

path road success business
Bank Stocks

TD Bank: Buy, Sell, or Hold?

TD is up 25% in 2025. Are more gains on the way?

Read more »

Dividend Stocks

5 Canadian Dividend Stocks I’d Buy Now and Hold for the Next 20 Years

Got $10,000? Here's the best way to create a dividend income portfolio that will last at least two decades.

Read more »