Got $5,000? These 2 Promising Stocks Are Trading Near Their 52-Week Lows

Given their discounted stock prices and healthy growth prospects, these two Canadian stocks look like excellent buys right now.

| More on:
A stock price graph showing declines

Image source: Getty Images.

After rising over 5% last month, the S&P/TSX Composite Index has continued its uptrend and is trading 3.5% higher this month. The lower-than-expected October inflation numbers in the United States appear to have raised investors’ confidence, thus driving the index higher. Last week, the U.S. Bureau of Labor Statistics announced that October’s consumer price index rose 7.7% from the previous year against analysts’ expectations of 7.9%.

Despite the improvement in investors’ sentiments, the following two Canadian companies are still trading close to their 52-week lows while offering an excellent entry point for long-term investors.

Algonquin Power & Utilities

Algonquin Power & Utilities (TSX:AQN), a utility and renewable energy company, lost close to 20% of its stock value on Friday as its net losses rose 600% to $195.2 million in the third quarter. The company’s management has blamed the timing of tax incentives related to some of its renewable energy projects and higher interest rates for the increase in net losses. Amid the challenging environment, the global utility’s management also lowered its 2022 adjusted earnings per share guidance from US$0.72-US$0.77 to US$0.66-US$0.69.

However, Algonquin has continued to drive its top-line and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization), which rose by 26% and 10%, respectively. In addition, the company is continuing with its growth initiatives. It recently amended the Kentucky Power acquisition agreement, lowering the purchasing price by US$200 million to US$2.846 billion. The acquisition could expand its rate base and grow customer connections. Management expects to close the deal in January 2023. The company is also developing several renewable energy facilities, which could increase its power production capacity by 640 megawatts. So, its growth prospects look optimistic.

Amid the recent decline, Algonquin trades around 30% lower for the year while its NTM (next 12 months) price-to-earnings has declined to an attractive 11.6, lower than its historical average. Also, the company pays a quarterly dividend, with its yield currently standing at a juicy 8.16%. So, despite the near-term weakness, I believe Algonquin would be an ideal addition to your portfolio.

Lightspeed Commerce

Following the announcement of lower-than-expected inflation numbers on Friday, Lightspeed Commerce (TSX:LSPD) rose 8.6%. Despite the rise, the company is still trading at a substantial discount of around 74% from its 52-week highs. The rising interest rates, expectation of growth slowing down, and weakness in the tech space have contributed to its decline.

Meanwhile, the company posted its Q2 earnings for fiscal 2023 earlier this month. Revenue grew by 38% to US$183.7 million, higher than analysts’ expectations of US$182.3 million. Solid organic growth and a contribution of US$7.5 million from the recently acquired Ecwid drove its revenue. During the quarter, the e-commerce platform’s average revenue per user grew by 25% to US$337 while adding around 1,000 new customer locations.

Lightspeed’s adjusted EBITDA losses declined marginally to US$8.5 million and were better than the management’s guidance of a loss of US$10 million. Meanwhile, given the uncertain economic environment and negative impact of currency translation, management lowered its revenue guidance for fiscal 2023 to US$730-US$740 million compared to its earlier guidance of US$740-US$750 million.

Looking forward, the company’s medium-to-long-term growth prospects look healthy. Small- and medium-scale businesses are looking to automate their business processes, enhance their customer interactions, and increase the utilization of analytics. The digitization of business will drive demand for Lightspeed’s products and services. Besides, the company’s price-to-book value has declined to 0.8, making it an attractive buy for long-term investors.

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 Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Lightspeed Commerce. The Motley Fool has a disclosure policy.

More on Tech Stocks

Growing plant shoots on coins
Tech Stocks

3 Growth Stocks That Look Ready to Double in 1 Year

These three growth stocks are "sleeping giants" ready to blast off in 2023 and beyond for investors who pick them…

Read more »

A data center engineer works on a laptop at a server farm.
Tech Stocks

3 Top Tech Stocks That Could Make You Rich by Retirement

Here are three of the best Canadian tech stocks with attractive dividends that you can buy now to get rich…

Read more »

potted green plant grows up in arrow shape
Tech Stocks

2 Growth Stocks to Invest $1,000 in Right Now

Are you looking for growth stocks to add to your portfolio? Here are two top picks!

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Is Amazon a Black Friday Buy?

Last year, Amazon reported record Black Friday weekend sales. This year, the company has to contend with consumers who have…

Read more »

gaming, tech
Tech Stocks

Better Gaming Buy: Take-Two Stock or Electronic Arts?

Investors looking to add a gaming stock to their portfolios might consider buying Take-Two or Electronic Arts.

Read more »

A worker uses the cloud for paperless work. tech
Tech Stocks

2 Tech Stocks to Buy Before a Rebound in 2023

These two tech stocks with strong earnings and winning business models will likely lead the sector’s rebound in 2023 when…

Read more »

analyze data
Tech Stocks

3 Date Night Ideas That Could Actually Help You Invest

If you're missing out on this opportunity to invest in a down market, your date night ideas could be to…

Read more »

grow dividends
Tech Stocks

TFSA Investors: Here’s Where to Park That Higher $6,500 Contribution

Here's why TFSA investors may want to consider Shopify (TSX:SHOP) as a long-term holding in this growth-focused fund right now.

Read more »