This week stocks have sold off a bit, which for savvy investors means an excellent time to find high-quality companies to buy.
Energy prices have come down, leading many stocks in the industry to pull back. In addition, inflation keeps ticking higher, and COVID-19 cases have been increasing again around the world.
This has led to a sell-off in stocks, with some falling out of favour more than others. We know that market pullbacks can create opportunities to buy, although usually, that’s after significant pullbacks in share prices. However, there are already Canadian stocks becoming undervalued as investors reposition their portfolios.
So if you’re looking to buy a high-quality stock today, here are two that are on sale.
Corus: One of the cheapest stocks in Canada
If you’re looking for a Canadian stock to buy on sale, Corus Entertainment (TSX: CJR.B) is easily one of the cheapest to consider.
The media stock, which earns almost all its money from advertisements on its TV channels and subscriptions to its streaming services, has been cheap for some time now. However, lately, it’s been selling off even more and now trades almost 20% off its 52-week high.
And with the recent selloff, its dividend currently yields almost 4.5%, making it a top stock to buy and hold. Plus, Corus has generally only reported positive numbers recently, yet the stock has continued to sell-off.
This is creating even more potential value for investors. The Canadian stock is currently valued at a trailing price to earnings (P/E) ratio of just 6.5 times and a forward P/E ratio of just 6.1 times. That’s not all, though. Corus also trades at a forward price to free cash flow ratio of just 3.95 times. That’s incredibly cheap.
There’s no telling when the stock may rally, but at this price, it offers investors a tonne of value. Plus, you can collect the attractive dividend while you wait for its stock to recover. Currently, the two analysts that cover the stock both have an average target price of $8.50. That’s a more than 55% premium to Friday’s trading price of $5.40.
So if you’re looking for a stock to buy undervalued, Corus is one of the cheapest Canadian stocks you can buy this week.
Nutrien: A top blue-chip stock to buy on sale today
Nutrien (TSX: NTR)(NYSE: NTR) is another high-quality Canadian stock that has no business trading this undervalued.
While you could look at its performance the last year, earning investors a total return of more than 50%, and think it might be overpriced, it actually still offers a tonne of value at this price. Even most of the 11 analysts covering Nutrien would agree, with 10 calling the stock a buy.
The company has seen a massive increase in potash and other fertilizer prices this year, which has benefitted its operations considerably.
So at its current share price, Nutrien is trading at a trailing enterprise value (EV) to EBITDA ratio of 9.9 times, which isn’t that cheap. However, its forward EV/EBITDA ratio is just 5.8 times which is much cheaper, in large part due to the significant growth it’s expected to see over the next year as inflation continues to impact commodity prices.
In addition to its production, Nutrien also has a significant network of retail stores that help vertically integrate the company and have only helped to improve its performance.
So while the stock trades below $90, I’d strongly consider taking a position. Not only is it undervalued, but it’s one of the best Canadian stocks that you can buy and hold for decades.
