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

Canadian Dollars
Stock Market

Where to Invest $5,000 in April 2024

Do you have some extra cash to spare? Here are five companies to invest $5,000 in next month.

Read more »

Plane on runway, aircraft
Stocks for Beginners

Up 53% From its 52-Week Low, Is Cargojet Stock Still a Buy?

Cargojet (TSX:CJT) stock is up a whopping 53%, nearing closer to 52-week highs from 52-week lows, so what's next for…

Read more »

Question marks in a pile
Bank Stocks

Should You Buy Canadian Western Bank for its 4.8% Dividend Yield?

Down 35% from all-time highs, Canadian Western Bank offers a tasty dividend yield of 4.8%. Is the TSX bank stock…

Read more »

Gold bars
Metals and Mining Stocks

Why Alamos Gold Jumped 7% on Wednesday

Alamos (TSX:AGI) stock and Argonaut Gold (TSX:AR) surged after the companies announced a friendly acquisition for $325 million.

Read more »

tsx today
Stock Market

TSX Today: Why Record-Breaking Rally Could Extend on Thursday, March 28

The main TSX index closed above the 22,000 level for the first time yesterday and remains on track to post…

Read more »

Nuclear power station cooling tower
Metals and Mining Stocks

If You’d Invested $1,000 in Cameco Stock 5 Years Ago, This Is How Much You’d Have Now

Cameco (TSX:CCO) stock still looks undervalued, despite a 258% rally. Can the uranium miner deliver more capital gains to shareholders?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Growth Stocks I’m Buying in April

These three growth stocks are up in the last year, and that is likely to continue on as we keep…

Read more »