The 1 TSX Stock I Would Buy This Week

This TSX stock did incredibly well during the pandemic, only to drop off during this downturn. Yet with earnings coming out, it could pop back up!

| More on:
A stock price graph showing growth over time

Image source: Getty Images.

A number of companies saw a huge sales climb during the pandemic. There was a shift to anything related to being at home, and the one surprise investors perhaps didn’t consider at first? Sleep.

Sleep Country Canada Holdings (TSX:ZZZ) proved that sleep has never been as important as it is today. And the pandemic really motivated a huge increase in that belief. The TSX stock surged in share price, but has since dropped back.

Yet, with earnings on the way and the market down, analysts believe now could be a great time to reconsider the stock. Let’s look at why.

Incoming positive news

Analysts recently came out with predictions for Sleep Country stock, marking the TSX stock as an outperformer for 2023. Granted, this may not occur until halfway through the year. “Soft consumer confidence” and “weak housing sales” have impacted the stock in the past. But that should change soon.

In particular, analysts peg the potential for more mergers and acquisitions, as well as further brand partnerships. Therefore, capital returns should be “robust,” as one analyst put it. Therefore, with underperformance in the past, analysts have started to increase their price targets.


All considered, investors should definitely consider Sleep Country stock undervalued at this point. And the fundamentals certainly line up with this notion. The TSX stock trades at just 9.7 times earnings at the time of writing. Further, ZZZ trades at 2.2 times book value, with just 87.9% of its equity needed to pay off all of its debts.

On top of this, the TSX stock currently offers a dividend yield at 3.49%. Combined, we should now look at the performance of ZZZ stock. Not just in the last few months, however. Instead, consider the last few years.

Why? Because what investors should look for is a company that can come out the other side of a downturn and continue trading strong. The pandemic saw an increase in the TSX stock, and it has come down since heights achieved in November 2021. However, over time, it has done quite well.

Shares are up 90% in the last decade alone. That’s a compound annual growth rate (CAGR) of 8.8%. Yet shares are down 12% in the last year, though they started to climb mid-February.

Earnings coming!

On March 2, the TSX stock will come out with earnings. After two quarters of beating earnings estimates, the company’s most recent earnings report came below estimates. This next one should perhaps show signs of improvement from the holiday season. What’s more, the maker of high quality sleep products is hopefully going to have way more news to announce to investors.

Therefore, this is the one TSX stock I would consider buying this week. One that remains down, and could turn on a dime after earnings. And that climb could see it climb back to share prices we’re unlikely to see until either the next downturn, or never again. That news will certainly help anyone sleep better at night with this TSX stock in their portfolio.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

analyze data
Dividend Stocks

How Much Do You Need to Invest to Give Up Work and Live Only Off Dividend Income?

Here's an honest assessment of how difficult it is to achieve "quit-your-job" levels of passive income.

Read more »

Profit dial turned up to maximum
Dividend Stocks

2 TSX Dividend Stocks With Seriously Huge Payouts

The TSX telecom sector has some great high-yielding companies up for grabs.

Read more »

TFSA and coins
Dividend Stocks

Dividend Stocks With Yields TFSA Investors Should Lock In Now!

Are you looking to build a passive-income stream? Here are two top dividend stocks to load up on in your…

Read more »

A plant grows from coins.
Dividend Stocks

2 Young TSX Stocks You’ll Be Glad You Bought in 10 Years

Youth means nothing when you plan to hold strong companies long term. These two TSX stocks should therefore be first…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

Is it a Trap? 3 TSX Stocks With Ultra-High Dividend Yields 

Who doesn’t love dividends? But the high-interest rate environment makes ultra-high dividends unsustainable. Are these stocks a value trap?

Read more »

Value for money
Dividend Stocks

3 Value Stocks for Superior Returns in 2023

Given their solid underlying businesses, stable cash flows, high dividend yields, and attractive valuations, these three undervalued TSX stocks could…

Read more »

Financial technology concept.
Dividend Stocks

2 TSX Value Stocks to Buy for Peace of Mind (and a Crazy-Good Deal)

2 TSX stocks that could outperform in the long term.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

2 of the Best Canadian Dividend Stocks I’d Buy Before March 2023 Ends

Here are two of the best Canadian dividend stocks you can buy on a dip in March 2023 to hold…

Read more »