The Canadian stock market trades near its all-time high, but there are still plenty of cheap Canadian stocks you can buy right now. Here are a few top stock ideas you can investigate further.
Air Canada stock
The airline industry was already unfairly impacted by COVID-19. Now, higher oil prices, with the WTI oil price hovering around US$110 per barrel, are probably what triggered the latest dip in Air Canada (TSX: AC) stock.
Be reassured that Air Canada has started recovering. In the latest quarter, AC stock reported $2.7 billion of revenues, which are three times the revenues generated in the quarter about six months prior. Additionally, it reported a gross profit of $82 million, which was much better than a loss of -$754 million a couple of quarters ago.
It looks like the normalization of the business could take at least a year or two. At least, AC stock seems to be getting some support from the $20 level, which is right about where it rebounded from in the last few days. Analysts currently have a consensus 12-month price target of $29.97 for AC stock, which represents near-term upside potential of about 43%. Longer term, perhaps over the next three to five years, AC stock could revisit the $40 range to double patient investors’ money from current levels.
Brookfield Business Partners stock
Brookfield Business Partners (TSX: BBU.UN)(NYSE: BBU) stock also looks cheap. The growth stock has corrected more than 20% from its 52-week high, which is a good entry point to get a position going.
Jason Mann talked about BBU stock on BNN in September 2020. The following comments are still relevant today:
“They’re effectively a private equity firm. They look to generate a 15% return on their portfolio of energy, infrastructure and power… You want to own this long term. It has a good balance sheet, and it trades at a reasonable price.”
Jason Mann, chief investment officer at EHP Funds
Brookfield Business aims to own and operate quality businesses that provide essential products and services. Because it buys and sells businesses (after it has improved their operations), its earnings will be bumpy. Therefore, the adjusted EBITDA, a cash flow proxy, is a better metric to gauge its business performance. Its 2021 adjusted EBITDA climbed 27% year over year to US$1,761 million.
The analyst consensus 12-month price target suggests there’s about 36% near-term upside in the growth stock, which also yields 0.6%.
Linamar stock
This week, Bruce Murray just picked Linamar (TSX: LNR) as one of his top stock picks on BNN. It’s a good entry point indeed after the recent correction of more than a third! Linamar also yields 1.5%. Here are Murray’s thoughts:
“I don’t see why the stock has come down so much. It’s mispriced. They make automotive products. Linamar is gaining market share in a business that faces a huge recovery. The chip shortage will go away. There’s fear that European production will be down because of Russia. Due to the excess capacity in the Russian/European manufacturers, that can be replaced quickly. It’s a great company. I think you can double your money by next year easily.”
Bruce Murray, CEO of The Murray Wealth Group
Bottom line
These three stocks could deliver strong price appreciation over the next three to five years, but beware: they will also come with above-average volatility. So, consider setting a range for your long-term sell price target to have your eyes set for substantial gains prospects.
