The TSX stock market correction has created some absolute bargains today. It is hard to tell when the bear market will stop. However, if you have a long-term mindset, you can buy stocks in high-quality growth businesses at ultra-low valuations. Here are three insanely cheap TSX growth stocks to consider buying in the market correction.
Calian Group: A top TSX, growth-at-a-reasonable-price stock
Calian Group (TSX: CGY) stock held up relatively well in 2022 — that is, until last week. It is down over 12% in the past several days. At today’s price, it only trades for 10 times earnings before interest, tax, depreciation, and amortization (EBITDA). That is below the valuation it traded at during the 2020 market crash.
Yet there is a lot to like about Calian’s business today. It provides a diverse array of services in healthcare, learning technology, satcom, and cybersecurity. The company has been growing profitably by just over 20% annually for the past several years. It has great contracts with military and government institutions in North America and Europe.
After a significant tech acquisition, it upped its 2022 guidance. It once again projects over 20% revenue and earnings growth this year. This stock is growing at twice the rate of its current valuation. Plus, it pays a decent 1.8% dividend yield. For value, growth, and income, this is a great TSX stock.
Brookfield Asset Management: This TSX stock has been through plenty of recessions before
Another top TSX stock hitting valuation lows is Brookfield Asset Management (TSX:BAM.A)(NYSE: BAM). With over $700 billion of assets under management, it is one of the world’s largest alternative asset managers. Fears about rising interest rates are negatively affecting sentiment in this stock. BAM is down nearly 25% in 2022.
Yet this is not BAM’s first rodeo through a recession. In fact, over the past 20 years, it has been through several. Every time, it was opportunistic and used its strong balance sheet to buy high-quality assets at fire-sale prices. Despite bear and bull markets, this TSX stock has delivered an attractive 16% annual average return.
Today, it trades for only 11 times adjusted funds from operation (its core measure of profitability). Over the past decade, the only other time it was this cheap was in the market crash of 2020. For a high-quality investment platform that could actually grow out of the downturn, BAM looks like a screaming bargain here.
Enghouse Systems: Value trap or value creation?
Enghouse Systems (TSX: ENGH) has a long history of compounding strong returns for shareholders. However, after several quarters with post-pandemic declining revenues, its stock has sold off. It is down 51% over the past 52 weeks.
While this is hardly anything to get excited about, now may be the perfect time to get excited. Enghouse has $230 million of net cash on its balance sheet. In the past, it has utilized economic downturns to swipe up cheap technology businesses and grow its long-term profitability.
This TSX stock only trades for 12 times the annual spare cash flow it generates. It trades with a free cash flow yield of 8%! On a price-to-earnings basis, Enghouse stock hasn’t traded this cheap since 2013.
It may still have some bumpy quarters. However, at some point it will get on an acquisition streak and investors will see long-term profitable growth on the other side.
