Canada’s primary stock market index hasn’t advanced substantially from year-end 2021 (+0.63%), and only four of the 11 primary sectors are in positive territory as of January 14, 2022. The energy (+16.19%), financial (+4.89%), telecom (+1.13%), and consumer discretionary (+0.51%) sectors lead the advancers.
The good news to investors this mid-month is that they can purchase three undervalued stocks at cheap prices. Tourmaline Oil (TSX: TOU), Corus Entertainment (TSX: CJR.B), and Dye & Durham (TSX: DND) trade below their intrinsic values.
Extensive asset base
Energy stocks with massive growth potential are hard to pass up. Market analysts have buy to strong buy ratings for Tourmaline Oil. They forecast a return potential between 37.19% and 67.73% in one year. The current share price is $45.31, while the dividend yield is 1.63%.
The $13.59 billion company has an extensive asset base in the Western Canadian Sedimentary Basin. Through aggressive exploration, development, production, and acquisitions, Tourmaline expects to provide strong and predictable long-term growth and a steady return to shareholders.
In the nine months ended September 30, 2021, the company reported 111% and 149% increases in revenue and cash flow, respectively, versus the same period in 2020. Notably, net earnings reached $1.02 billion, or a 9,565% turnaround. Tourmaline has yet to report its full-year 2021 results. However, it expects a $2.8 billion free cash flow this year from a capital spending of $1.125 billion.
Strong start to fiscal 2022
Corus Entertainment is absurdly cheap ($5.30 per share), although the 12-month average price target of analysts is $8.18 (+54.34%). The overall return to would-be investors should be higher if you factor in the 4.53% dividend. In Q1 fiscal 2022 (quarter ended November 30, 2021), management presented impressive numbers.
The $1 billion media and content company reported 10% and 28% growth in consolidated revenue and free cash flow, respectively, versus Q1 fiscal 2021. Net income, however, declined by 1%. Corus’s president and CEO Doug Murphy said, “We have delivered a strong start to the year with impressive double-digit revenue growth and notable free cash flow.”
Murphy added, “Television revenue in Q1 surpassed pre-pandemic levels, benefiting from Global TV’s winning Fall schedule and robust advertising demand.” He noted that the re-aggregation of its channels business on streaming platforms should provide long-term resiliency and growth potential. Management also sees future growth opportunities in digital video and Corus-owned content business.
$1 billion adjusted EBITDA
Dye & Durham is a potential multi-bagger. Based on analysts’ price forecasts, the current share price ($41.61) could climb 54.77%, on average, to as much as 85.05% in 12 months. This tech stock also pays a modest 0.18% dividend.
The platform of this $3.16 billion legal technology company connects the largest global network of professionals with public records. In early December 2021, management announced a transformational acquisition.
Dye & Durham will purchase Link Administration Holdings Limited, a technology-driven market leader in Australia. According to its CEO Matthew Proud, Link fits perfectly well with Dye & Durham’s “Build to a Billion” strategy ($1 billion adjusted EBITDA).
Great value buys
Tourmaline Oil, Corus Entertainment, and Dye & Durham are great value buys in January 2022. Their breakouts in one year or less could be imminent.
