2 of the Best Recovery Stocks to Buy While They’re Still Cheap

If you’re looking to get the most bang for your buck in this market environment, these two recovery stocks are some of the best to buy now.

| More on:
Woman has an idea

Image source: Getty Images

For months, recovery stocks have been some of the best businesses you could buy. Lately, though, as the economy has been consistently improving and putting the pandemic behind us, these recovery stocks began to become overlooked.

Now, though, with the market starting to sell off again over the last few weeks, and the fact that it’s been for a COVID-related reason, many recovery stocks, which are naturally more volatile to coronavirus issues, have sold off significantly.

These fears are easing, though, as initial reports and research are showing that the Omicron variant is causing milder symptoms than most of the other variants. And now, over the last two days, we’ve started to see the market recover in a meaningful way.

So, with that in mind, here are two of the best recovery stocks to buy while they are still cheap.

One of the best recovery stocks for dividend investors to buy

Restaurant stocks have made a big improvement over the last six months. However, some, such as Boston Pizza Royalties (TSX:BPF.UN), still offer investors incredible value today.

Boston Pizza is Canada’s largest casual restaurant dining chain. So, naturally, it was always going to be one of the best recovery stocks to buy.

Because its locations mostly rely on dine-in patrons, it was understandably impacted quite significantly by the initial shutdowns. And because the fund collects a royalty on all the sales of each restaurant, you would expect to see a massive decrease in revenue while shutdowns and restrictions were in place.

At the worst point of the pandemic, Boston Pizza saw its sales impacted by just over 50%. As of the third quarter, though, through the summer months, they have almost completely recovered.

The fund is being understandably cautious with the dividend, though. So, over time, as we continue to emerge from the pandemic, especially after the winter, you can expect the stock to continue seeing a significant recovery. And the fund’s dividend, which currently yields roughly 6.7%, will likely see another significant increase.

So, while the stock trades undervalued, I’d be looking to gain some exposure. It still offers potential to recover further, but is also a much safer option than other recovery stocks like Air Canada, should the situation with the pandemic get worse before it gets better. So, if you’re looking for a recovery stock to buy today, Boston Pizza is one of the best in Canada.

A top Canadian financial stock with tons of upside potential

Another stock that’s been impacted by the recent volatility but still offers a ton of potential for investors today is Manulife Financial (TSX:MFC)(NYSE:MFC). With interest rates so low and the economy suffering lately, Manulife stock has struggled.

At roughly $23.50 a share, where it started the trading day on Tuesday, Manulife was down more than 15% off its 52-week high. Furthermore, its dividend is yielding upwards of 4.7%.

The company isn’t impacted by restrictions like a Boston Pizza or Air Canada. However, as I mentioned before, it can expect a major tailwind as interest rates start to increase, which is expected to happen in 2022, as the economy continues to recover.

That’s not the only reason to buy Manulife, though. It’s also an excellent long-term financial stock that, in addition to paying an attractive dividend, has years of growth potential as it expands its operations in Asia.

So, if you’re looking for a recovery stock to buy now, I think Manulife offers investors some of the best value on the market today.

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 Daniel Da Costa owns shares of BOSTON PIZZA ROYALTIES INCOME FUND and MANULIFE FIN. The Motley Fool has no position in any of the stocks mentioned.

More on Stocks for Beginners

retirees and finances
Dividend Stocks

How to Create a Million-Dollar TFSA in Two Decades

Your TFSA could create riches you didn't know were possible, but only if you commit again and again to your…

Read more »

Coworkers standing near a wall
Stocks for Beginners

2 Unassailable Earnings Growth Stocks for a Wobbly Economy

Aritzia and another top growth stock that could be hot performers through 2023 and beyond.

Read more »

Chalk outline of two arrows pointing in opposite directions
Stocks for Beginners

2023 Is a Terrible Time to Be a Saver: Here’s What to Do With Your Money Instead

You can hold short-term GICs for your liquidity needs but also consider investing your money in quality businesses for the…

Read more »

edit Sale sign, value, discount
Stocks for Beginners

3 Cheap Stocks I’d Buy in Bulk When a Recession Hits

Not only would I grab these cheap stocks during a recession, I would then hold them for the next decade…

Read more »

Female hand holding piggy bank. Save money and financial investment
Stocks for Beginners

Millennials: How to Take Full Advantage of That “RRSP” Thing

I get it; it's hard to invest for the future when the present is stressful, but there are present benefits…

Read more »

Man with no money. Businessman holding empty wallet
Stocks for Beginners

Canadians Investors: How to Know When We’ve Hit a Recession

A recession is coming in 2023, but what does that even mean? And how can investors protect themselves before it…

Read more »

man slides
Dividend Stocks

TFSA Investors: Where to Put That New $6,500 Contribution Room

These stocks may be trading high, but they still offer value for TFSA investors seeking out the best stocks to…

Read more »

A bull and bear face off.
Stocks for Beginners

3 Cheap Stocks I’d Buy Before the 2023 Bull Market Arrives

Investors seeking out value should consider these cheap stocks, which could be some of the best stocks to buy before…

Read more »