Canadian stocks are looking bearish in December. However, this might be the best Christmas gift you will get all year. Stocks on the TSX Index were slightly overheated in November.
The recent pullback is creating an incredible opportunity to pick up underfollowed, under-the-radar stocks at incredibly cheap prices. Each of these three Canadian stocks has an attractive investment thesis, but the recent stock correction makes them exciting opportunities for 2022 and beyond.
A top Canadian value stock
The first Canadian stock for December is Intertape Polymer (TSX: ITP). This stock has price-to-earnings ratio of under 10, a 3.5% dividend, and an attractive organic growth profile. What more can you want?
Intertape is one of North America’s largest distributors of tapes, wraps, and packaging products. If you collect e-commerce packages on a weekly basis, chances are good that some of Intertape’s products help seal those packages. While the company has products for a wide range of industries, e-commerce has been a major recent growth vertical.
This Canadian stock sold off after its third-quarter earnings showed inflationary costs putting pressure on margins. Yet the company has strong pricing power (margins should quickly recover), a solid balance sheet, and an attractive high-single-digit organic growth profile.
An undervalued growth stock
Another underfollowed Canadian growth stock is Calian Group (TSX: CGY). Despite soundly hitting its outlook for fiscal 2021, Calian stock has fallen 6% since November. In fact, the stock today is actually lower than it was at the start of January this year.
Yet Calian is a vastly better company than in 2020. For the past two years, it has grown revenues by 20%. EBITDA has grown by nearly double that rate. The point is, as it gets larger, margins improve, and it becomes more profitable.
Today, it only trades at 15 times EBITDA. This Canadian stock has a great cash-rich balance sheet ($78 million net cash), so it has a lot of flexibility on how it keeps pushing growth ahead. Analysts have an average price target of $81. At its current price of $57 per share, that represents 42% upside from here.
A cheap Canadian stock with ample upside next year
Speaking about another cheap Canadian growth stock, you aren’t going to find a better deal than BRP (TSX: DOO)(NASDAQ:DOOO). This stock has risen over 300% in the past five years. Yet, despite demonstrating very strong growth and earnings power, it only trades with a price-to-earnings ratio of 10!
BRP manufactures some of the world’s best-known brands of all-terrain and aquatic vehicles. Sea-Doo and Ski-Doo are basically synonymous with snowmobiles and personal water craft. Pent-up recreational demand out of the pandemic is outpacing the rate of supply.
In fact, supply chain challenges are one of the reasons the stock recently sold off 12%. However, management believes these issues are largely behind it. It expects to bring on new production capacity early next year. Likewise, a lineup of new innovative products should continue to drive solid growth into 2022. Consequently, for value and growth, BRP is one of the best under-the-radar stocks you can find for next year.
