2 Canadian Stocks That Are Excellent Deals Right Now

These two Canadian stocks are excellent undervalued investments to buy and hold for the long term to grow your wealth.

| More on:
edit Sale sign, value, discount

Image source: Getty Images

The Canadian stock market has been incredibly volatile due to several factors in recent months. The S&P/TSX Composite Index is down by 13.82% from its 52-week high as of this writing.

Many investors are understandably worried about their investment portfolios amid all the uncertainty. Such a significant downturn across the entire stock market results in substantial losses. However, value-seeking investors look at downturns like these as an opportunity to buy high-quality stocks at a bargain.

With stocks across most sectors of the Canadian economy down from their all-time highs, you cannot consider just any asset an undervalued stock. It is important to conduct your due diligence to determine whether the underlying business has the potential to deliver stellar long-term returns. Today, I will discuss two such dividend stocks you can consider adding to your investment portfolio.

Dream Industrial REIT

Real estate investment trusts (REITs) allow you to try your hand at real estate investing without buying investment properties yourself. Dream Industrial REIT (TSX:DIR.UN) is one such trust you can consider for this purpose.

Dream Industrial REIT is a $3.04 billion market capitalization trust that invests in a portfolio of industrial properties leased by various businesses, protecting its cash flows from downturns in the residential real estate sector.

As of this writing, Dream Industrial REIT trades for $11.83 per unit and boasts a juicy 5.92% dividend yield. It is down by 30% year to date amid broader market weakness and is attractively valued. Its price-to-earnings multiple is down to an attractive 3.22 ratio, and it is relatively undervalued with a 0.72% price-to-book ratio.

Stelco Holdings

Stelco Holdings (TSX:STLC) is a $2.41 billion market capitalization Canadian steel company headquartered in Hamilton. Founded over a century ago, Stelco is one of the few steel-producing companies in Canada.

Formed as several steel producers banded together in 1910, Stelco declared bankruptcy in 2007, followed by its acquisition by US Steel. Steel prices have taken a hit in recent months, but a positive price momentum for the commodity might send Stelco share prices soaring in the coming months.

The company’s second-quarter earnings report for fiscal 2022 saw it deliver 13% year-over-year revenue growth, and its operating income increased by 12% in the same period. As of this writing, Stelco Holdings stock trades for $35 per share, down by 38.5% from its 52-week high.

It boasts an attractive 1.52 price-to-earnings ratio, suggesting that it has the potential to deliver substantial growth. It could be an excellent investment for value-seeking investors at current levels.

Foolish takeaway

It is important to remember that stock market investing is inherently risky, especially during volatile market conditions. If you are willing to assume the risk, you can consider investing in undervalued stocks with the potential to deliver stellar long-term returns.

Dream Industrial REIT and Stelco Holdings stock appear to be attractively valued right now, but there is a chance they might become even better bargains if the market downturn continues. You can consider waiting on the sidelines and keeping a close eye on these stocks to scoop up shares if prices go lower.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends DREAM INDUSTRIAL REIT.

More on Dividend Stocks

A worker drinks out of a mug in an office.
Dividend Stocks

1 Dividend Stock to Buy if the Bank of Canada Keeps Cutting Rates 

This dividend stock is sure to benefit from ongoing cuts in the key interest rate and is already seeing some…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

How Much Cash Do You Need to Quit Work and Live Off Dividend Income

Toronto-Dominion Bank (TSX:TD) pays a lot of dividend income. Can you live off of it in retirement?

Read more »

An analyst uses a computer and dashboard for data business analysis and Data Management System with KPI and metrics connected to the database for technology finance, operations, sales, marketing, and artificial intelligence.
Dividend Stocks

Invest $10,000 in This Dividend Stock for $1,398.40 in Passive Income 

This dividend stock offers a whopping 11.9% dividend yield right now, with returns that should fly high for this cyclical…

Read more »

Person holds banknotes of Canadian dollars
Dividend Stocks

This 6.1 Percent Dividend Stock Is My Pick for Instant Income

Here’s what makes Transcontinental one of my top dividend stock picks right now for instant income.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

For a Shot at $5,000/Year in Passive Income, Buy 1,000 Shares of This TSX Stock

Do you know you can build passive income with TSX stocks? A $22,000 investment can give you a shot at…

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

A new Canoe EIT Income Fund (TSX:EIT.UN) investment could earn almost 9% yield annually, and the monthly dividend stock has…

Read more »

RRSP (Registered Retirement Savings Plan) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

RRSP Wealth: 2 Great Dividend Stocks to Own for Total Returns

Dividend stocks like Fortis Inc (TSX:FTS) can be great additions to a well-diversified portfolio.

Read more »

edit Sale sign, value, discount
Dividend Stocks

3 Cheap Stocks to Add to Your TFSA Before They Get Expensive

The stock market has some lucrative TFSA stocks trading at multi-year lows. Now is a good time to buy these…

Read more »