2 of the Best Canadian Stocks to Buy Now

Telus International (TSX:TIXT)(NYSE:TIXT) and Enbridge (TSX:ENB)(NYSE:ENB) look like very compelling Canadian value picks for October 2021.

| More on:
stock research, analyze data

Image source: Getty Images

As we move further into a volatile fall and winter season, investors would be best advised to stay the course with their top Canadian stocks. Indeed, an uptick in volatility is perceived as a huge negative, especially to beginner investors who got started this year. But for stock pickers, volatility can bring forth a greater chance of market mispricings. And for an investor, it’s all about getting just a bit more for every dollar you’ll put down on a secure holding. Indeed, value investing is based on this premise.

And although people are more likely to speculate on Bitcoin, value investing is likely to come out on top, just as it has so many times in the past, through speculative manias and rough patches where the public interest in stocks was at a low.

In this piece, we’ll have a look at two Canadian stocks that may very well be mispriced to the downside, making them superb buys now for those looking to close off a choppy year.

Consider shares of Telus International (TSX:TIXT)(NYSE:TIXT) and Enbridge (TSX:ENB)(NYSE:ENB), two attractive plays that may not have appreciated as much as they could have, given the good long-term fundamentals and potential catalysts heading into the new year.

Telus International

Telus is better known for its telecom business. But fewer Canadians are aware of the IT spin-off that is Telus International. The firm provides (CX) customer experience and digital IT solutions to a wide range of clientele. Telus, the telecom we all know and love, has a reputation for above-average customer service. And Telus International is a likely reason why. The firm caters to numerous clients spanning industries from healthcare to communications, both industries that the Telus of old has been involved in.

Undoubtedly, we’re undergoing a major digital transformation. With that, the growing importance of CX and other digital solutions, making Telus International a compelling growth option for investors who want to strike a good balance between secular growth and value.

The stock trades at just 4.9 times sales and 5.8 times book value. Although hot of late, analysts seem mixed between buying and holding. I think the name is a great mid-cap for those familiar with higher levels of volatility.

Enbridge

Enbridge is back. It’s been a long time coming, but the stock is finally delivering on both fronts again, with solid appreciation (up nearly 30% year to date!) and a huge dividend (6.4%) that’s slated to grow. Undoubtedly, the energy industry has been in full-on rally mode of late. And pipeline kingpin has benefited dramatically. As oil looks to surpass US$100 again for the first time since the energy meltdown back in 2014, I think ENB stock could prove to be severely undervalued at these levels.

The stock trades at 17.5 times trailing earnings, which is way too cheap given the momentum faced by an industry that’s pretty much taken a 180-degree turn in a hurry. Up around 50% from its 2020 lows, Enbridge is a momentum play. But it’s also one that seems to be full of value. Whether Enbridge can make new highs amid this energy rally is anyone’s guess. At these valuations, though, I like the risk/reward.

ENB stock is at the intersection between momentum and value. If you seek passive income, appreciation and aren’t afraid to bet on the energy patch, shares of the midstream giant look appear ready to pick up where they left off many years ago.

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends TELUS International (Cda) Inc.

More on Investing

think thought consider
Stock Market

Billionaires Are Selling Apple Stock and Picking up This TSX Stock Instead

Billionaires like Warren Buffett continue to trim stakes in Apple stock, with others picking up this long-term stock instead.

Read more »

ways to boost income
Dividend Stocks

1 Excellent TSX Dividend Stock, Down 25%, to Buy and Hold for the Long Term

Down 25% from all-time highs, Tourmaline Oil is a TSX dividend stock that offers you a tasty yield of 5%…

Read more »

canadian energy oil
Energy Stocks

Is Baytex Energy Stock a Good Buy?

Baytex just hit a 12-month low. Is the stock now oversold?

Read more »

Start line on the highway
Dividend Stocks

1 Incredibly Cheap Canadian Dividend-Growth Stock to Buy Now and Hold for Decades

CN Rail (TSX:CNR) stock is incredibly cheap, but should investors join insiders by buying the dip?

Read more »

bulb idea thinking
Dividend Stocks

Down 13%, This Magnificent Dividend Stock Is a Screaming Buy

Sometimes, a moderately discounted, safe dividend stock is better than heavily discounted stock, offering an unsustainably high yield.

Read more »

a man relaxes with his feet on a pile of books
Investing

Outlook for Sun Life Financial Stock in 2025

Sun Life is up 25% this year. Are more gains on the way?

Read more »

Canadian Dollars bills
Dividend Stocks

Invest $15,000 in This Dividend Stock, Create $5,710.08 in Passive Income

This dividend stock is the perfect option if you're an investor looking for growth, as well as passive income through…

Read more »

woman looks out at horizon
Stocks for Beginners

Here’s How Much Canadians at 35 Need to Retire

If you want to create enough cash on hand to retire, then consider an ETF in one of the safest…

Read more »