Value stocks haven’t been doing well in the past decade as compared to their growth counterparts. Growth stocks have seen a massive rise in popularity, especially after the Great Recession.
However, there seems to be a major shift in the trend, with undervalued stocks gaining popularity among investors. Investors who are looking for value may want to consider Alimentation Couche-Tard (TSX:ATD) and Dream Industrial REIT (TSX:DIR.UN).
Let’s dive into why these two stocks should be on the radar for value investors right now.
Top value stocks: Alimentation Couche-Tard
Top North American convenience store-chain operator Alimentation Couche-Tard has posted strong financial performance in recent quarters. As economic activity resumes following the pandemic, there’s a lot to like about how this company is positioned for growth.
In fact, the company’s recent results showed impressive strength. Couche-Tard grew its revenue to $18.6 billion, representing a year-over-year growth rate of more than 41%. For any stock, that’s impressive. For a company with a valuation of only 16 times earnings, even more so.
Strong bottom-line results also drop interest from fundamental value investors. The company’s earnings per share grew 27%, and the company announced a Circle K Venture Fund to focus on growing its revenue via startups focused on enhancing the customer experience.
Overall, Couche-Tard is a company that isn’t content sitting still. This company is constantly on the lookout for deals or ways of improving its core business. For long-term investors looking for value, that’s a good thing.
Dream Industrial REIT
Another excellent value stock I’ve had on my radar for some time is Dream Industrial REIT. As its name suggests, this trust is a REIT focused on the industrial real estate segment. In layman’s terms, these are the warehouses and distribution centres that power our economy.
Right now, real estate valuations remain high, despite rising interest rates. While higher interest rates could become a valuation concern for all real assets, the reality is that Dream Industrial is highly insulated. That’s because this trust owns a high-quality portfolio of industrial real estate located near city centres.
Historically, Dream Industrial has also been a winner in terms of financial performance. This company’s most recent results showed astronomical net income growth of 133%, along with a 71% increase in net assets over the past year. This sort of growth is almost unheard of in the space and speaks to the quality of Dream Industrial’s portfolio.
Valued at only six times earnings with a dividend yield of 4.3%, there’s a lot to like about how this company is positioned right now.
