Investors seeking value in today’s market may have a difficult time doing so. Indeed, valuations are sky high right now. Accordingly, dirt-cheap value stocks have been dragged up with the overall market of late.
For value investors, this is a good thing. Seeing a return on one’s investment is always a positive. However, the extent to which deep-value stocks still hold this value is a question many investors are asking right now.
The thing is, in every market, there are always value opportunities. Here are three of my top picks in this regard I think value investors should look at today.
Top value stocks: Alimentation Couche-Tard
One of the top value stocks on my radar for some time has been Alimentation Couche-Tard (TSX:ATD.B). This is for various reasons.
One of the key reasons is because of this company’s business model. Couche-Tard is known as the second-largest convenience store operator in North America. This firm operates 15,000 stores across various locations such as the U.S., Canada, Mexico, Ireland, Sweden, etc.
From a performance standpoint, this company has emerged as a clear winner. Couche-Tard currently offers investors a return on equity around 22%. That’s quite incredible. Additionally, Couche-Tard has increased its earnings per share at a whopping 25% compounded growth rate over the last decade.
Given this backdrop, Couche-Tard stock currently trades at around 16 times earnings. Given this growth profile, that’s dirt cheap.
Sun Life Financial
Sun Life Financial (TSX:SLF)(NYSE:SLF) features second on my list due to its valuation relative to its growth prospects. Indeed, it appears the market has started to recognize this value, with Sun Life stock rising in a rather steady fashion since the beginning of the year.
Like Couche-Tard, Sun Life has been active in the acquisition space. For those bullish on where valuations are in the insurance/finance space, this is a good thing.
Like Couche-Tard, Sun Life’s valuation is relatively attractive. The company trades around 12 times earnings. While this is on par with peers, it’s a valuation worth noting for investors with a long-term investing time horizon.
Killam Apartment REIT
In the real estate space, one stock I’ve thought has carried tremendous value in recent years is Killam Apartment REIT (TSX:KMP.UN). Much of this is again due to the company’s growth profile. The firm’s CEO Philip Fraser has remarked positively on this REIT’s ability to grow its net income in the future. Renter demand remains strong, and the company has positioned itself well with a string of property acquisitions at what appear to be great prices.
The company boasts a market cap of $2.5 billion, with net income growth of 536% on a year-over-year basis. Despite these metrics, Killam currently trades around 10 times earnings. That’s far to cheap, given the value of this company’s real estate portfolio — at least, in my view.