3 TSX Stocks You Can Still Buy for Under $20 a Share

Are you shopping for cheap stocks? Here are some undervalued TSX stocks for you to explore. They come with risks, though.

| More on:
A close up image of Canadian $20 Dollar bills

Image source: Getty Images

North American stock markets fell yesterday due to hot U.S. inflation of 8.3% in August. The U.S. stock market, using S&P 500 ETF as a proxy, tumbled more than 4%, while the Canadian stock market, using iShares S&P/TSX 60 Index ETF as a proxy, dipped almost 2%. The high inflation entails that higher interest rates are here to stay for the near term.

Indeed, this month the Bank of Canada increased the benchmark interest rate by 0.75% to 3.25% and hinted more hikes will come as inflation remains high. For reference, Canada’s latest data shows July inflation was 7.6%, which was well above the central bank’s target of 1-3%.

Greater market volatility with further market correction could occur through the end of the year and probably continue into 2023. In the meantime, you can check out these three TSX stocks that you can buy for under $20 a share. They appear to be cheap.


Construction company Aecon (TSX:ARE) is a cyclical stock. History clearly illustrates that its adjusted earnings per share (EPS) could go up or down over at least two consecutive years. Last year, its adjusted EPS tumbled. This year, they’re expected to drop again. In the past 15 years, the company hasn’t had more than two years of falling earnings. Therefore, if history is indicative of the future, its business could make a huge comeback in 2023.

At writing, Aecon trades at $11.93 per share — a price that’s closer to the low end of its long-term trading range. At the high end, it could trade in the $21 range for price gains of about 76%. It could take a few years to get there, though. Meanwhile, the volatile stock offers an above-average dividend yield of 6.2% versus the Canadian market’s yield of approximately 3%.

Its payout ratio is overextended this year. However, management is keen on paying its dividend — one that it has maintained or increased every year since 2008. Since inception, Aecon’s retained earnings are $404.9 million, which is evidence of the staying power of the business.

For a lower-risk stock, investors can turn to the following Canadian real estate investment trust (REIT).

InterRent REIT

Rising interest rates have cooled off the real estate market. The valuation of InterRent REIT (TSX:IIP.UN) has also tumbled to more normalized levels. In fact, the high-growth residential REIT was one of the top stock picks of a Foolish writer this month. Daniel Da Costa wrote “with vacancy rates already ultra-low, immigration picking back up and students returning to post-secondary schools this fall, there is little downside risk left with these stocks.”

Analysts currently have a 12-month average price target of $16.31 on the stock, which represents over 30% near-term upside potential from $12.50 per unit at writing. The REIT also pays a 2.7% yield for the wait.

If you’re looking for even greater value, you can explore energy stocks.

Whitecap Resources

For example, Whitecap Resources (TSX:WCP) will continue to generate substantial cash flow even if oil prices were to fall to lower levels. From 2018 to 2020, the oil stock produced free cash flow (FCF) of over $237 million every year.

This means the company was doing fine, even during the worst economic times of the pandemic when economic shutdowns were widespread. In the trailing 12 months (TTM), its FCF generation exploded to over $1 billion!

Management has taken advantage of high energy prices to immensely improve its balance sheet. For instance, its end of second-quarter debt-to-equity ratio shrank to 65% versus 2020’s 2.39 times.

At $9.30 per share at writing, the energy stock offers a yield of 4.8%. Its TTM payout ratio was less than 17% of free cash flow. Analysts currently have a 12-month average price target of $15.32 on the stock, which represents over 64% near-term upside potential.

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 Kay Ng has positions in Aecon and InterRent REIT. The Motley Fool has no position in any of the stocks mentioned.

More on Dividend Stocks

grow dividends
Dividend Stocks

1 Cheap Stock to Turn a $20,000 TFSA Into $267,000

If you're looking to boost your TFSA, you need a cheap stock that you can hold for decades. And I…

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

2 of the Best Monthly Passive-Income Stocks to Buy in Canada Right Now

Here are two of the best Canadian monthly passive income stocks you can consider buying right now to hold for…

Read more »

stock analysis
Dividend Stocks

3 TSX Stocks I Will “Never” Sell

Few companies offer a powerful enough combination of dividends and growth potential to deserve a permanent place in your portfolio.

Read more »

value for money
Dividend Stocks

2 Cheap TSX Stocks for TFSA and RRSP Investors to Buy Now

These stocks look attractive today to buy for a TFSA or RRSP portfolio.

Read more »

Increasing yield
Dividend Stocks

3 TSX Stocks With High Dividend Yields

These three high-yielding dividend stocks would be excellent additions to your portfolio in this volatile environment.

Read more »

Payday ringed on a calendar
Dividend Stocks

New Investors: 3 Top TSX Dividend Stocks That Pay Cash Monthly

Canadian investors looking for monthly dividends have plenty of options on the TSX. Here's three of my favourite stocks for…

Read more »

woman data analyze
Dividend Stocks

These U.S. Stocks Are No-Brainer Additions to Your Portfolio

Buy these two no-brainer U.S. stocks if you want to gain exposure to international stocks in your self-directed portfolio.

Read more »

Value for money
Dividend Stocks

1 Value Stock Every Canadian Investor Should Own

This value stock not only has a solid present, but a stable future at incredibly cheap and even oversold prices!

Read more »