2 Undervalued Canadian Stocks Worth a Buy Right Now

Two Canadian stocks are strong buys right now because their current share prices are way below their true values.

| More on:
Business man on stock market financial trade indicator background.

Image source: Getty Images

Canada’s primary stock market made a resounding comeback to start the fourth quarter of this year. All 11 sectors advanced on October 3, 2022, led by the technology sector’s 5.6% gain. If you’re scouting for great buys right now, two stocks continue to trade way below their intrinsic values.

You can capitalize on these bargains and snag undervalued TSX stocks like Aura Minerals (TSX:ORA) and Cineplex (TSX:CGX). Both are selling at less than $10 per share, but the potential windfall could be substantial.

Top-ranked growth stock

Aura Minerals ranked number one on the 2022 TSX30 List for the second year in a row. The mining stock was also a top-ranked stock in 2021. It won top honors in the fourth edition of the flagship program for growth stocks owing to its +683% performance (adjusted by dividends) in the last three years.

However, the current share price of $9.58 seems too low vis-à-vis the growth potential. Company President and CEO, Rodrigo Barbosa, said, “This award is a market recognition of Aura’s potential to deliver value to shareholders and to our team.” He adds that Aura has already demonstrated its ability to deliver results in a volatile environment, first with the pandemic and now with high inflation.

The $633.23 million mid-tier gold and copper producer develops and operates gold and base metal projects in the Americas. Apart from the San Andres gold mine in Honduras, Aura has producing assets in Brazil (Ernesto/Pau-a-Pique gold mine) and Mexico (Aranzazu copper-gold-silver mine).

According to Barbosa, Aura still has a lot to do, including progressing and completing additional gold projects in Brazil (Almas and Matupa). Last month, management announced the acquisition of Big River Gold Limited. Big River’s sole asset, the Borborema Gold Project, falls under the joint venture between Aura (80%) and Dundee Resources Limited (20%).

While profit declined 13.4% to $43.86 million in the first half of 2022 versus the same period in 2021, management expects higher production in the second half of 2022. For income investors, Aura pays a juicy 6.98% dividend (semi-annual payouts).

Capitalizing on pent-up consumer demand

Cineplex is still in recovery mode due to the fallout of the COVID-19 pandemic. The stock is down 33.7% year-to-date. Nevertheless, market analysts covering CGX recommend a buy rating. Their 12-month average price target is $14.96, or a 66% increase from the current share price of $9.01.

The $586.2 million entertainment and media company recently shared some good news with investors. Because of the 1,013% increase in theater attendance in the first half of 2022 versus the same period in 2021, total revenues soared 444% year-over-year to $578.6 million. Likewise, net loss reduced to $40.9 million from $193.4 million.

Ellis Jacob, Cineplex’s President and CEO, said about the Q2 2022 results, “Cineplex delivered its strongest quarter in over two years, thanks to a great film slate and record-breaking results from across our diversified businesses.” Net income for the quarter reached $1.3 million compared to the $103.7 million net loss from a year ago.

Jacob adds that Cineplex is well positioned to further capitalize on pent-up consumer demand for affordable out-of-home entertainment.

Interesting prospects

Aura Minerals and Cineplex are interesting prospects for value investors. The stocks should unlock their true values with the easing of inflation.  

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends CINEPLEX INC. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Canadian Dollars
Dividend Stocks

How I’d invest $1,000 in December to Make Easy Passive Income

These BMO covered call ETFs are great for generating passive income.

Read more »

golden sunset in crude oil refinery with pipeline system
Dividend Stocks

Advisor Commentary: Should You Buy Algonquin Power Stock? [PREMIUM]

Declines of this magnitude aren’t generally found in utility-land, and it behooves us to have a peek.

Read more »

TFSA and coins
Dividend Stocks

TFSA: 3 Buy-and-Hold Dividend Stocks With Massive Long-Term Potential

These dividend stocks could more than double your TFSA, all from reinvesting solid passive income for years to come.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

These 4 Canadian Dividend Stocks Are a Retiree’s Best Friend

Dividend stocks are a retiree's best friend. But what about during a recession? Buy these four dividend stocks for solid…

Read more »

top TSX stocks to buy
Dividend Stocks

3 High-Yield Dividend Stocks to Earn a Truckload of Passive Income in 2023

High-yield dividend stocks such as Keyera and Fiera Capital are well poised to deliver consistent returns to shareholders in 2023.

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Dividend Stocks

Retirees: Supplement CPP With 3 Stocks That Pay You Every Month

Equity investors can supplement CPP payouts by creating a portfolio of monthly paying dividend stocks such as Savaria.

Read more »

Profit dial turned up to maximum
Dividend Stocks

Beat the Market With 2 Growing Companies

Dividend-paying TSX stocks such as Restaurant Brands International and Brookfield Asset Management are top long-term bets.

Read more »

Electricity high voltage pole and sky
Dividend Stocks

Should You Buy Algonquin Stock Now or Wait?

Algonquin Power stock has a massive 9.8% dividend yield today! Is now the time to buy or should income investors…

Read more »