2 Undervalued Stocks I’d Buy Today

Canadians should still look to pick up undervalued stocks like Real Matters Inc. (TSX:REAL) in the first half of September.

| More on:
Value for money

Image source: Getty Images

The S&P/TSX Composite Index fell 36 points on September 9. Industrials and telecoms took the biggest hit on the day. Today, I want to look at two undervalued stocks that have sent off buy signals over the past week. Let’s jump in.

Why this cannabis stock looks cheap right now

HEXO (TSX:HEXO)(NASDAQ:HEXO) is an Ottawa-based company that produces, markets, and sells cannabis in Canada. It boasts the top market share in the cannabis-infused beverages market. Shares of HEXO have plunged 44% in 2021 as of close on September 9. I’d discussed why this undervalued stock was on my radar in early August. This is still a stock worth buying on the dip.

The company unveiled its third-quarter 2021 results back in June. Revenue fell 29% from the prior year to $22.6 million. This was due to weaker sales in Quebec and Alberta, as some of its cannabis products did not meet quality checks. Worse, HEXO posted negative adjusted EBITDA of $10.8 million. This was a sore spot, as it is locked in competition with other producers who have achieved or are close to achieving profitability.

HEXO is still well positioned to benefit from its recent acquisitions that will close in the latter half of this year. However, it will need to tweak its strategy when it comes to its product offerings. Moreover, increased competition has eaten into its advantage in the cannabis-infused beverage space. HEXO will have to prove the doubters wrong in the quarters ahead.

Shares of HEXO last had an RSI of 20. That puts this undervalued stock well into oversold territory.

One more undervalued stock I’m still looking to add

Real Matters (TSX:REAL) is an Ontario-based company that provides technology and network management solutions to mortgage lending and insurance industries in Canada and the United States. Shares of this undervalued stock have dropped 38% in the year-to-date period. The stock is down 51% year over year.

This stock was my top pick for the month of August. It has failed to gain momentum in the late summer, but I’m not off the bandwagon. The North American housing market continues to look strong in the face of historically low interest rates and surging demand. Real Matters is perfectly positioned to benefit.

The company released its third-quarter 2021 results on July 28. Consolidated revenues climbed 9.6% from the prior year to $129 million. Real Matters achieved record revenues in its U.S. Appraisal and Canadian segments. The company had launched eight new lenders in U.S. Title in the year-to-date period at the end of Q3 2021. Moreover, it launched six new lenders in U.S. Appraisal.

Shares of Real Matters last had a favourable price-to-earnings ratio of 22. This puts the undervalued stock in better value territory than the industry average. Real Matters last had an RSI of 35. This puts it just shy of technically oversold levels. However, it is still worth scooping up as we approach the middle of September.

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 recommends HEXO Corp. and Real Matters Inc.

More on Investing

edit Colleagues chat over ketchup chips
Dividend Stocks

How to Earn $5,350/Year in Passive Income — TAX FREE!

Canadian investors could earn over $5,000/year in tax-free passive income by targeting stocks like First National Financial Corp. (TSX:FN) and…

Read more »

Money growing in soil , Business success concept.
Tech Stocks

3 Growth Stocks Down More Than 50% to Buy for Outsized Gains in 2023

Beaten-down growth stocks such as Shopify provide investors the opportunity to derive exponential gains once market sentiment improves.

Read more »

edit Four girl friends withdrawing money from credit card at ATM
Bank Stocks

2 Top TSX Bank Stocks to Buy in February 2023

Here's why Toronto-Dominion Bank (TSX:TD) and Bank of Nova Scotia (TSX:BNS) are two top TSX bank stocks to consider right…

Read more »

Businessman holding AI cloud
Tech Stocks

ChatGPT Could Spell an “AI Revolution” for These Canadian Stocks

ChatGPT indicates a breakthrough in AI that could bolster stocks like Shopify (TSX:SHOP).

Read more »

A tractor harvests lentils.
Metals and Mining Stocks

Here’s Why Nutrien Stock Is 1 of my Top Stock Picks This Year

Not all food stocks are equally attractive, and if you are in this for the long haul, it's a good…

Read more »

Dots over the earth connecting the world
Investing

3 Great Foreign Companies to Invest in Right Now

TotalEnergies (NYSE:TTE), Farfetch (NYSE:FTCH), and MercadoLibre (NASDAQ:MELI) stocks are three great foreign companies to buy right now.

Read more »

Man holding magnifying glass over a document
Dividend Stocks

Passive-Income Investors: 2 TSX Dividend Stocks to Watch in February

There’s never a bad time to think about building a passive-income stream. Here are two top dividend stocks to get…

Read more »

HIGH VOLTAGE ELECRICITY TOWERS
Energy Stocks

Algonquin Power & Utilities Stock Just Hit 52-Week Lows: Is it a Good Stock to Buy? 

Algonquin Power & Utilities (TSX:AQN) is trading near its seven-year low after dividend and outlook cuts. Is it a buy…

Read more »