Canadian stocks have been volatile in 2022. Yet given attractive valuations, many Canadian stocks could outperform over the remainder of the year. If you are willing to be a patient long-term investor, here are four incredibly cheap stocks you could look at buying before April.
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A top-quality energy stock
Canadian energy stocks have been on fire in 2022. Many are up 30% or more in just the past three months. One quality stock I have my eye on is Cenovus Energy (TSX: CVE)(NYSE: CVE). This stock has underperformed its peers on the S&P/TSX Capped Energy Index, and it could be due for a catch-up trade.
Cenovus operates among Canada’s largest integrated energy producers. It has a diverse operational platform and very long-term oil reserves. With oil prices above US$100, it is gushing free cash flow. The stock trades with an 18% free cash flow yield. Likewise, it is cheap at 5.9 times free cash flow and 6.6 times earnings.
The company should reach debt targets sooner than expected, which means shareholders should be primed for dividend increases and ample share buybacks. If you feel you missed the energy trade, this is one Canadian stock that is a lower-risk, higher-reward opportunity.
A top Canadian financial stock
If you are looking for a great portfolio staple to buy and hold, Brookfield Asset Management (TSX:BAM.A)(NYSE: BAM) looks like a bargain. Brookfield has built a renowned empire of alternative assets and investment funds/strategies.
With interest rates expected to stay relatively low in the years ahead, institutional investors should continue to flock to Brookfield for elevated cash-yielding returns. As a result, it is not unforeseeable that assets under management could hit $1 trillion sooner than investors expect.
Despite a strong year in 2021, this Canadian stock is still incredibly cheap compared to peers. Management believes its stock trades at as much as a 30% discount to its intrinsic value. I believe Brookfield will find a way to bridge this gap and long-term patient investors will be rewarded over time.
An ultra-cheap growth stock
If you are looking for a growth stock that is very cheap, goeasy (TSX: GSY) should be on your radar. Over the past 10 years, it has earned investors an annual compounded return of 37%. That is one of the best average annual returns on the TSX. Despite, a great record of growth and profitability, this Canadian stock only trades for 11 times earnings.
It is one of Canada’s largest providers of non-prime leasing and loan products. Over the past few years, it has significantly improved its credit profile and expanded the breadth of its services. goeasy has its eyes set on new international markets and new lending verticals as well.
While the stock is down 24% this year, today looks like a great long-term opportunity to pick up this growth stock at a more than fair price.
A Canadian growth stock unfairly discounted
Hardwoods Distribution (TSX:HDI) is another incredibly cheap Canadian growth stock. It is one of North America’s largest distributors of architectural building products. The company has built out a large distribution network by acquiring niche building product distributors. Over the past five years, Hardwoods stock has delivered a 147% return.
Despite strong execution and great results in 2021, its stock only trades for 6.8 times earnings and 5.4 times EBITDA. Hardwoods just acquired two large-scale businesses that open sales to the less-cyclical home-renovation and retail market.
The business is substantially better than it was five years ago, yet it trades at nearly half the valuation it did. If you want deep value and solid growth prospects, this is a great stock to look at now.
