The Canadian equity markets are trading close to their all-time highs, with the S&P/TSX Composite Index up over 18% for this year. However, some Canadian companies are still trading at a significant discount from their recent highs and provide excellent buying opportunities. In this article, we will look at four such companies.
The pandemic-induced travel restrictions had forced Air Canada (TSX:AC) to ground its aircraft, thus driving its financials and stock price down. Currently, the company trades close to 50% lower than its pre-pandemic levels. Meanwhile, with the widespread vaccination and removal of some of the harsh travel restrictions, the market conditions are improving.
Air Canada has resumed its flights to several destinations in the United States and other destinations worldwide. Further, the company is looking to add more cargo-only aircraft amid rising demand. Along with these initiatives, the improvement in economic activities could boost the company’s financials in the coming quarter. Its financial position also looks healthy, with its liquidity standing at $9.77 billion as of June 30. With its forward price-to-sales multiple standing at an attractive 0.7, I believe Air Canada could deliver robust returns over the next three years.
Canopy Growth (TSX:WEED)(NYSE:CGC) is another stock that has witnessed a steep fall from its recent highs. The weakness in the cannabis sector and its mixed first-quarter performance have dragged the company’s stock price down, which trades 70% lower than its February highs. However, the steep decline provides an excellent buying opportunity, given the expanding cannabis market and the company’s growth initiatives.
Amid rising demand for higher THC content products, Canopy Growth looks to introduce new products across various categories. It has around 100 SKUs in the pipeline. Further, the company recently acquired Ace Valley and Supreme Cannabis, which expanded its product offerings and strengthened its production capabilities.
Meanwhile, the company also owns warrants to acquire Acreage Holdings once the U.S. government legalizes cannabis at the federal level. So, the company’s growth prospects look healthy. The company’s management has taken several initiatives to lower its expenses and also improve efficiencies. These initiatives could deliver $150-$200 million of saving in this and the next fiscal year.
The decline in gold prices has severely dented Kinross Gold’s (TSX:K)(NYSE:KGC) stock price, which currently trades over 44% lower from its 52-week high. Amid the rising inflation, investors could shift their focus back to gold, a safe haven, driving its prices higher. Along with robust gold prices, higher production and increased output from low-cost mines could drive the company’s financials in the coming quarters.
Kinross Gold’s management expects its gold production to increase by 20% over the next three years to reach 2.9 million gold equivalent ounces by 2023. Its financial position also looks solid, with its liquidity standing at $2.2 billion as of June 30. The company also pays a quarterly dividend of $0.03 per share, with its yield standing at 1.58%. So, Kinross Gold could be an excellent addition to your portfolio.
My final pick would be Cineplex (TSX:CGX), which trades over 60% lower from its January 2020 levels. The closure of entertainment avenues due to the pandemic-induced restrictions had dragged the company’s financials and stock price down. However, amid the easing of restrictions, the company has reopened all its scenes from July 17.
Cineplex has implemented VenueSafe measures at all its scenes to enhance the safety of its employees and guests. It has also initiated a movie subscription program called CineClub for $9.99 per month. Along with these initiatives, the pent-up demand and an increased number of new movie releases could drive the company’s financials in the coming quarter. Further, the company’s strong financial position and cost-cutting initiatives provide a solid foundation for growth.
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.
The Motley Fool recommends CINEPLEX INC. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.