The TSX reacted negatively to news of a slowdown in economic recovery. However, despite sliding to 20,806.03 after the Labour Day weekend, the index remains in record territory. If you’re planning to invest right now, consider B2Gold (TSX:BTO), Computer Modelling Group (TSX:CMG), and Canacol Energy (TSX:CNE).
All three are approaching their 52-week lows, yet market analysts maintain strong buy ratings. Based on their price forecasts, the upside potential is between 30% and 85%. Also, none of the share prices are above $5. Your capital gains could be considerable in the next 12 months.
On track to exceed production guidance
B2Gold trades at a deep discount ($4.85 per share) on September 7, 2021. One year ago today, the share price was $8.16, or 68% higher. Market analysts see the price climbing to $9.02, an 86% return potential. The gold stock pays a 3.97% dividend. The $5.11 billion company is known as a low-cost international senior gold producer.
It has three producing mines, two development projects, and five exploration projects. The sites are Colombia, Namibia, Burkina Faso, Mali, and the Philippines. In Q2 2021, net income declined 46% versus Q2 2020. It could be the reason for the price drop. Still, growth in gold production and cash flow looms as B2Gold remains on track to exceed its annual production guidance for 2021.
Dividend-paying tech stock
Computer Modelling investors are down 12.44% year to date. However, they have a cushion, as the tech stock pays a generous dividend. At $4.15 per share, the yield is 4.83%. The $333.19 million software company from Calgary caters to customers in the oil and gas industry. It develops reservoir modelling software worldwide.
In Q1 fiscal 2022 (quarter ended June 30, 2021), total revenue and operating income dropped 14% and 2%, although net income increased 14% versus Q1 fiscal 2021. Computer Modelling derives revenue from maintenance licenses, perpetual licenses, and professional services. Only South America reported an increase in licenses during the quarter. Management said revenues are lagging because customers lowered spending budgets due to the pandemic.
Renewable energy matrix
Canacol Energy has been steady for most of 2021, although the stock is down 7.92% year to date. If you were to purchase today, the share price is only $3.35. However, market analysts predict an upside of 64.21% to $5.50 (12-month average target). The potential return would be higher if you factor in the juicy 6.23% dividend.
The $592.35 million natural gas exploration and production company operates in Colombia. Canacol helps the country transition toward cleaner energy. The government targets a 51% reduction in greenhouse gas (GHG) emissions by 2030. Under the renewable energy matrix, natural gas utilization would grow by 4% annually from 2020 to 2033.
In the first half of 2021, Canacol Energy’s net loss was US$638 million compared to the US$8.2 million net loss in the same period last year. The country-wide shut down in March 2020 reduced demand for gas significantly. However, Colombia is gradually lifting shutdowns this year. The threats to the business are the La Nina climate phenomenon and recent political unrest.
Cheap dividend stocks with risks
B2Gold, Computer Modelling, and Canacol Energy are your cheap investment options this September. While all three carry a strong buy rating and pays decent dividends, investors should understand the inherent risks in the respective businesses.
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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.