Buying cheap stocks is often more attractive. However, buying lower-dollar stocks doesn’t guarantee solid future returns. Like any other stock, investors need to take caution and look at its fundamentals and future growth prospects rather than only focusing on price.
With cheap stocks in the backdrop, I have shortlisted three Canadian companies, shares of which are priced under $10. These companies have solid fundamentals and will likely deliver superior returns in the long run.
Kinross Gold
Kinross Gold (TSX: K)(NYSE: KGC) is trading under $10 and, in my view, is a solid bet for long-term investors. Notably, Kinross Gold stock is down over 28% in one year due to the weakness in average realized prices of gold and normalization of demand trends. Despite the near-term weakness, I am bullish over Kinross Gold’s long-term prospects and see this dip as a solid buying opportunity.
I expect Kinross Gold to continue to benefit from its diversified portfolio of low-cost mines and increased exposure to gold. Meanwhile, Kinross Gold’s solid project pipeline and focus on increasing production and lowering costs will likely support future growth and boost its margins.
Further, Kinross’s strong balance sheet and cash flow-generating capabilities should help the company to enhance shareholders’ returns through regular dividend payments. Also, Kinross Gold stock trades at an EV/EBITDA multiple of 4.3 — much lower than its historical average — and compares favourably to its peers. Moreover, it offers a decent yield of 1.9%.
StorageVault Canada
StorageVault Canada (TSXV:SVI) is growing rapidly, reflected through the 81% growth in its stock price over the past year. Despite the recent growth, it is well within every investor’s reach and trading under $10. Its solid fundamentals, momentum in the business, and market-leading position in the domestic market suggest that StorageVault stock could continue to trend higher.
I believe the continued strength in its underlying business, accretive acquisitions, and cost-optimization position it well to deliver higher revenues and profits. Meanwhile, StorageVault’s growing rental space, organic growth opportunities, higher occupancy, and operational efficiency will continue to support its growth. Further, its robust M&A pipeline and the significant barriers to entry bode well for growth.
StorageVault has consistently enhanced its shareholders’ returns through dividend payments. Meanwhile, its strong revenues, solid funds from operations, and growing demand will continue to support its future payouts.
Goodfood Market
Goodfood Market (TSX: FOOD) stock is an attractive investment trading under $10. The stock corrected of over 35% this year due to expected normalization in demand. However, I am bullish on the strong secular industry trends, higher spending on omnichannel platforms, and the growing adoption of online grocery services.
Goodfood is Canada’s leading online grocery service provider and has maintained a strong competitive positioning in the online grocery space. Meanwhile, the solid subscriber base, expanding grocery selection, and same-day delivery capabilities support its future growth.
Additionally, its fixed-cost leverage, focus on reducing delivery time, optimization of cost structure, and last-mile delivery optimization suggest that the company will likely deliver strong financials in the coming quarters, which will push its stock price higher.
