Although there aren’t too many Canadian stocks trading at cheap valuations to buy in this market environment, investors still have some promising opportunities. With that said, though, just because it’s much harder to find undervalued stocks today doesn’t mean investors should lower their standards.
This is crucial because some stocks that are trading cheap today are undervalued due to the fact that the company is struggling, and the market is concerned for the business’s future. So it’s paramount we make sure that although the Canadian stock we are going to buy is cheap, it’s still a high-quality business that’s consistently profitable and generates tonnes of cash flow.
Because when you find high-quality businesses that are consistently profitable, it doesn’t matter what these stocks are valued at. Even if the stock doesn’t budge for a few quarters, if they generate attractive cash flow and are highly profitable, then the value of your investment should continue to grow over the long run.
So if you’re looking for some high-quality Canadian stocks that you can buy at a cheap price today, here are two of the best to consider.
A top Canadian gold stock
Gold stocks are some of the cheapest stocks that Canadian investors can buy at the moment. And although not every Canadian gold stock is a top-notch business, Kinross Gold (TSX: K)(NYSE: KGC) is one of the best to buy while it’s still cheap.
Kinross is a senior gold producer worth $9 billion with mining operations worldwide, allowing it to produce more than two million ounces a year. And not only does it have an excellent business with diversified operations, but Kinross also has impressive financials, which is why it’s one of the top Canadian gold stocks to buy while it’s cheap.
Over the past few years, as gold has skyrocketed in value, Kinross’ profitability has soared. This has led the company to start returning cash to shareholders as well as paying down a tonne of debt, vastly increasing the strength of its balance sheet.
At current prices, Kinross trades at a forward enterprise value to EBITDA ratio of just 3.8 times, which is extremely low. So if you are looking to add more exposure to gold in this uncertain environment or are just a value investor looking for a high-quality Canadian stock that’s cheap, Kinross is one of the best to buy now.
A top Canadian stock to buy while it’s still cheap
Another top Canadian stock that’s been consistently earning a profit and strong free cash flow but remains extremely undervalued is Corus Entertainment (TSX: CJR.B).
Corus is a media company that owns TV channels, streaming services, and its own content creation business. The stock has been relatively cheap for some time. And while that was warranted a couple of years ago, Corus has quietly been improving its business quite substantially.
One of the concerns from investors is Corus’s debt load. However, in recent years, the stock has been earning tonnes of free cash flow, which it’s mostly used to fund the dividend and pay down debt. So Corus is now in much better shape and continues to improve its financial position each quarter.
And with the Canadian stock’s earnings coming out next week, you might want to buy it soon given that it might not be this cheap for much longer.
Currently, Corus trades at a price to free cash flow ratio of just 4.3 times. Furthermore, it pays a dividend that yields more than 4%. So if you’re looking for a top value stock to buy now, Corus is an excellent option to consider.
