The TSX today continues to trade at incredibly high levels. In fact, it’s up almost 3,000 points since the beginning of the year, as of writing. That’s incredible growth; it’s no wonder we’re currently trading in a bull market. But just because the market is performing well doesn’t mean there aren’t value stocks to be found.
In fact, there’s a trick Motley Fool investors can use when looking for value stocks on the TSX today. That trick is to seek out opportunities. By that, I mean short-term opportunities. Now, I don’t mean you should then sell right away. We at the Motley Fool believe that you should always try to invest long term. But if there is a sector due for a bounce, or a stock due to rise with earnings, you should try and take advantage of that.
With that in mind, here are four value stocks that present opportunities for Motley Fool investors to jump in on.
Oil and gas
The oil and gas sector continues to go through a rebound, presenting strong opportunities for a quick turnaround. But there are a lot of companies to choose from, so investors need to find companies that present the best value stocks. In this case, I would actually stay away from oil and gas producers for now. There is an incredibly volatile situation happening with both the pandemic and the Organization of Petroleum Exporting Countries (OPEC+) — one that may see shares drop suddenly.
Instead, I would stick to pipeline companies. These continue to be in high demand and don’t depend on OPEC to make their exporting decisions. Even better, with the pandemic restrictions easing, there are opportunities for these value stocks to build future projects.
In this case, the two I would choose today are Enbridge (TSX:ENB)(NYSE:ENB) and Pembina Pipeline (TSX:PPL)(NYSE:PBA). Both of these companies have future growth projects on top of decades of long-term contracts. Pembina has also been creating partnerships for new opportunities in carbon capture. With demand and these projects on the way, this is a strong opportunity for these value stocks.
On top of that, both are top dividend producers, with a 6.81% yield for Enbridge stock and a 6.45% yield for Pembina stock. And both are a steal right now, trading at a P/E ratio of 16.32 for Enbridge stock and a P/B ratio of 1.83 for Pembina stock!
Another way to get in on value stocks for short-term boosts is through earnings, as I mentioned. Luckily, this week is earnings season for the Big Six banks. While a few have come out already, Motley Fool investors can still buy ahead of earnings for Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and Toronto-Dominion Bank (TSX:TD)(NYSE:TD). Frankly, they’re the two on the TSX today I would buy first anyway.
CIBC is the leading contender among the Big Six banks for a strong recovery. This is now actually because of its Canada-focused investments. The company has seen revenue explode in the past year, and that’s only likely to continue. So, investors can pick it up before a major boost.
TD stock is a strong long-term investment for Motley Fool investors, because it offers substantial growth opportunities. The Big Six bank is an innovator when it comes to finding revenue streams. And in this new DIY banking economy, it’s found ways to continue bringing in stable revenue no matter the wealth on hand by its clients.
And again, you can pick up each of these value stocks with dividends of 3.96% for CIBC and 3.67% for TD stock. CIBC is still a steal as well, despite 40% growth year to date with a P/E ratio of 12.5. TD stock is similar with 23% growth this year alone, and a P/E ratio of 11.1!
If you’re a Motley Fool investor seeking value stocks, these four provide strong opportunities. Even better, whether you choose Enbridge stock or TD stock, all provide a solid long-term investment on the TSX today as well, supported by a short-term boost!
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 Amy Legate-Wolfe owns shares of ENBRIDGE INC, PEMBINA PIPELINE CORPORATION, and TORONTO-DOMINION BANK. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends PEMBINA PIPELINE CORPORATION.