3 Cheap Housing Stocks I’d Buy Today

Canadian real estate is reeling, but I’m still looking to snatch up undervalued housing stocks like Equitable Group Inc. (TSX:EQB).

| More on:
House Key And Keychain On Wooden Table

Image source: Getty Images

The Canadian housing market has faced significant turbulence during the spring season. Inflation has soared to a three-decade high in Canada, which has spurred policymakers into action. Today, on June 1, 2022, the Bank of Canada (BoC) rose the benchmark interest rate to 1.5%. Investors should expect this to apply more pressure on the domestic real estate space. That said, low supply and steady demand means that the fundamentals are still encouraging in this sector. Today, I want to look at three housing stocks that look undervalued to kick off the month of June.

These two alternative lenders will rise and fall with Canadian real estate

Canada’s top alternative lenders have been key players in the domestic housing market over the past decade. In 2017, the housing space faced major challenges. Home Capital (TSX:HCG) found itself on the verge of collapse due to significant underwriting issues. Fortunately, the company was able to come back from the brink with a little assist from Warren Buffett and the government.

This Toronto-based company provides residential and non-residential mortgage lending. Its shares have plunged 25% in 2022 as of early afternoon trading on June 1. In Q1 2022, Home Capital reported mortgage originations of $2.76 billion — up from $1.60 billion in the first quarter of 2021. Its total loan portfolio grew by 5.6% to $19.4 billion.

Shares of this housing stock possess a very favourable price-to-earnings (P/E) ratio of 6.5. It last paid out a quarterly dividend of $0.15 per share. That represents a 2% yield.

Equitable Group (TSX:EQB) is another top alternative lender that has thrived during the COVID-19 real estate boom. This housing stock is down 13% so far this year. In Q1 2022, the company saw earnings increase 34% year over year to $92.4 billion. Meanwhile, adjusted diluted earnings per share jumped 33% to $3.64.

Assets under management increased 18% from the prior year to $43.4 billion. Meanwhile, adjusted revenue increased 26% to $188 million. It saw single family alternative loans rise 37% to $15.4 billion. Shares of this housing stock last had an attractive P/E ratio of 6.9. Better yet, it offers a quarterly dividend of $0.29 per share, representing a modest 1.8% yield.

This discounted housing stock also offers up a monster dividend

Investors who are on the hunt for income in this volatile environment may want to snatch up Bridgemarq Real Estate (TSX:BRE). This Toronto-based company provides various services to residential real estate brokers and REALTORS in Canada. The stock has dropped 10% so far in 2022. Its shares have plunged 16% from the previous year.

The company unveiled its first-quarter 2022 earnings on May 12. It posted revenue growth of 2% to $13.4 million. That was powered by strong growth in its stable of realtors. Meanwhile, it posted net earnings of $4.7 million or $0.50 per share — up from a net loss of $2.5 million in the first quarter of 2021.

This housing stock possesses a favourable P/E ratio of 15. Better yet, it offers a monthly distribution of $0.113 per share. That represents a monster 9.2% yield.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool recommends EQUITABLE GROUP INC.

More on Investing

consider the options

This Stock Is Miles Ahead of its Industry: Is it a Buy Now?

This company has been making significant waves since the beginning of 2024.

Read more »

Dice engraved with the words buy and sell
Bank Stocks

TD Bank Stock: Buy, Sell, or Hold at the 12-Month Low?

TD is near its 12-month low. Is more downside on the way?

Read more »

financial freedom sign
Stocks for Beginners

Could This Undervalued Stock Make You a Millionaire One Day? 

The TSX has good millionaire-maker stocks if you wait. This futuristic stock might look undervalued once you see its growth…

Read more »

Make a choice, path to success, sign
Tech Stocks

The Best and Worst Canadian Stocks So Far in 2024

The recent rate cut could benefit two Canadian stocks but would not lift two underperforming tech stocks.

Read more »

question marks written reminders tickets
Tech Stocks

Could This Under-the-Radar Canadian Stock Be the Next Shopify?

An under-the-radar Canadian stock could be the next Shopify, given its market-beating and stellar returns thus far in 2024.

Read more »

View of high rise corporate buildings in the financial district of Toronto, Canada
Dividend Stocks

Top 2 REITs to Buy Before Yields Fall Along With Interest Rates

Canadian Apartment Properties REIT (TSX:CAR.UN) is just one REIT that could gain when rates really start to tumble.

Read more »

Printing canadian dollar bills on a print machine
Dividend Stocks

Where to Invest $10,000 in June

Canadian small caps are widely outperforming the TSX, and REITs, including Dream Industrial REIT (TSX:DIR.UN) could recover as interest rates…

Read more »

A glass jar resting on its side with Canadian banknotes and change inside.

CPP Benefits: How to Take Advantage of the Increase!

Canadians should take advantage of the new CPP enhancement and build a passive-income nest egg with dividend stocks like Brookfield…

Read more »