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

grow dividends
Dividend Stocks

3 Canadian Stocks With a Real Chance of Doubling Your TFSA’s Value

Three outperforming Canadian stocks can help TFSA investors double their account balances.

Read more »

Hand writing Time for Action concept with red marker on transparent wipe board.
Dividend Stocks

3 No-Brainer Stocks I’d Buy Right Now Without Hesitation

At any given time, the market may have certain stocks that offer a powerful combination of reliability, potential, valuation, etc.,…

Read more »

money cash dividends
Dividend Stocks

This 8.39% Dividend Stock Can Pay $100 Cash Every Month

Consider investing in this monthly dividend stock at current levels to lock in high-yielding monthly distributions to create a good…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

Here’s the Average TFSA Balance in 2024

The Bank of Montreal (TSX:BMO) says that the average TFSA balance is $41,510, far below the maximum.

Read more »

A glass jar resting on its side with Canadian banknotes and change inside.
Dividend Stocks

Investors: Here’s How to Make $1,000 Each Month in Retirement

Here's how you can easily make $1,000 in monthly passive income in retirement in Canada, without taking on too much…

Read more »

man touches brain to show a good idea
Dividend Stocks

3 No-Brainer TSX Stocks I’d Buy Right Now Without Hesitation

Three TSX stocks that continue to overcome massive headwinds and beat the market are no-brainer buys right now.

Read more »

calculate and analyze stock
Dividend Stocks

TFSA Investors: 2 Top TSX Dividend Stocks to Buy on a Dip and Hold Forever

These top TSX dividend stocks now offer attractive yields and big potential capital gains.

Read more »

grow money, wealth build
Dividend Stocks

1 Dividend Stock to Buy for Growth and Stay for a 5.5% Yield

This dividend stock has been rising higher, but more could certainly be on the way. Now is the time to…

Read more »