3 Screaming Bargains on the TSX Index

Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) is just one screaming bargain to buy right now, as TSX Index volatility picks up in September.

| More on:
Portrait of woman having fun in the street.

Image source: Getty Images

Because it’s been so long that we’ve been without a 5-10% pullback in the TSX Index, almost everyone is making a big deal of the 2% dip endured this week. Every past 1-2% selloff has caused some to forecast the beginning of the next market correction. Undoubtedly, the bears have been wrong, and the odds are still against them, as screaming bargains become that much better. Still, as we head deeper into a seasonal period that historically has not been so kind to stocks, investors may have a chance to pick away at their favourite bargains on the way down.

In this piece, we’ll have a look at four screaming bargains that could become even more attractive over the coming weeks and months should this “selloff” mark the start of a deeper pullback in the Canadian indices.

Alimentation Couche-Tard

Alimentation Couche-Tard (TSX:ATD.B) is a breakout name that’s unlikely to be rattled by forces that’ll end up moving the broader markets. It’s a defensive growth stock with a pretty low beta, meaning shares tend to move more under their own power than in the footsteps of the TSX Index. Low betas can work both ways. A name could flatline or pull back in a rallying market, as Couche-Tard did in the first quarter of the year. On the flip side, when volatility picks up, as it could in September and October, it may prove to be wise to jump into low-beta value names with defensive characteristics.

In any case, you won’t be sacrificing growth potential by getting into the name as it looks to break out while markets sag. Growth by acquisition is Couche-Tard’s specialty. And I have no doubt that it will achieve high double-digit earnings growth over the next five years. With that will come some pretty serious upside with a side of dividend hikes.

Don’t miss out on the convenience store king at under 17 times earnings.

Algonquin Power

Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) is a great dividend-growth stock that’s fallen on hard times in 2021. COVID-19 disruptions have impacted business, helping contribute to the latest correction in the name. After a roller-coaster ride for nearly two years, I think it’s finally time to load up before the breather ends and the renewable power play’s next leg up. With shares in correction territory now off over 13% from their all-time high, it’s hard to find a better bargain that promises growth and dividends.

The screaming bargain trades at just 10.5 times earnings, with a juicy 4.4% yield, which could grow at a double-digit rate moving forward. As COVID-19 headwinds abate, I’d look for Algonquin to test the $22-23 range by the year’s end.

Hydro One

Sticking with the theme of Steady Eddies, we have Hydro One (TSX:H), which is one of my favourite bond alternatives out there. You’re not going to get the same magnitude of growth as you would the likes of an Algonquin or Couche-Tard. However, you will be able to sleep very comfortably at night knowing the firm’s payout is on incredible solid footing. The company’s cash flow stream is protected by its sky-high moat in the province of Ontario. Although the moat and virtual monopoly have stifled growth prospects, I certainly wouldn’t be against owning the name if your portfolio lacks sufficient hedges or low-to-no beta names that can buoy your portfolio before the next market typhoon hits.

At new highs, Hydro One isn’t cheap. But versus bonds, they’re a screaming bargain. A 3.4%-yield dividend that’ll grow annually? You’re not going to find that in the world of fixed-income debt securities. Not these days, anyway!

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.

More on Dividend Stocks

Woman has an idea
Dividend Stocks

3 No-Brainer Best Dividend Stocks in Canada to Buy With $500 Right Now

Are you craving more cash flow? $500 in one of these best dividend stocks in Canada might deliver a slice…

Read more »

Canadian energy stocks are rising with oil prices
Dividend Stocks

5 Stocks Whose Dividends Just Keep Growing

Stocks like Enbridge and Fortis are growing their dividends for decades, and returning higher cash to their shareholders.

Read more »

Dividend Stocks

2 Stocks I’m Loading Up On in 2024

Restaurant Brands International (TSX:QSR) and another stock I'm pretty close to buying right here, right now.

Read more »

protect, safe, trust
Dividend Stocks

RRSP Investors: 2 Superior Dividend Stocks for Optimal Returns

Superior dividend stocks like the Canadian National Railway (TSX:CNR) can add income power to your portfolio.

Read more »

Increasing yield
Dividend Stocks

TFSA Passive Income: 2 High-Yield Stocks to Buy Before They Bounce

These top TSX dividend-growth stocks look cheap today and offer high yields.

Read more »

Portrait of woman having fun in the street.
Dividend Stocks

Why I Can’t Stop Buying Shares of This Magnificent High-Yield Dividend Stock in My TFSA

This dividend stock continues to be a top winner, even with returns falling the last few years. We're nearing some…

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Investors: 1 Cheap Dividend Stock That Could Soar in 2025

This dividend-growth stock now trades at a discounted price and offers a 7% yield.

Read more »

Hand writing Time for Action concept with red marker on transparent wipe board.
Dividend Stocks

1 Dividend Stock Down 13% to Buy Right Now

Are you looking for a buy-the-dip opportunity? This dividend stock is down 13% and is a buy right now before…

Read more »