The Canadian stock market came out flying to start off the year. After dropping nearly 10% in 2022, the S&P/TSX Composite Index is already up 5% year to date.
Despite inflation and interest rates both still alarmingly high, there’s a sense of optimism in the stock market that the worst may be behind us.
Of course, it’s anybody’s guess as to how the Canadian stock market will fare this year. Stocks largely cooled off in February and we may see that continue into March. On the other hand, if we do manage to stave off a recession, we may be at the start of a new bull market right now.
All that said, as a long-term investor, I’m not overly concerned with how the market performs over the next 12 months. And for anybody else that plans to hold their positions for at least the next five years, you shouldn’t either. Instead, I’d strongly suggest taking a look at the bargains that are currently available on the TSX. After the down year in 2022, there are plenty of high-quality Canadian stocks trading at must-buy prices.
If you’ve got some extra cash to spare, here are two value stocks to add to your watch list.
Value stock #1: Sun Life
There’s nothing wrong with an investment being considered boring. Growth investors may not be overly excited about this insurance company but growth is far from the main reason to be a shareholder.
At a market cap of $40 billion, Sun Life (TSX: SLF) is a global insurance provider. In addition to offering a wide-ranging portfolio of insurance products, the company also provides wealth and asset management services to its customers across the globe.
Stability and passive income are the two reasons why I’ve got Sun Life on my own watch list, not to mention the stock’s cheap valuation. Shares may be trading near all-time highs, but the stock is still only valued at a forward price-to-earnings (P/E) ratio of 10. You won’t find many other TSX stocks with valuations like that low, that are as dependable as Sun Life.
Insurance is far from the fastest-growing market around, but it sure is a dependable one. It’s hard to imagine a time when insurance is no longer going to be needed by both consumers and businesses.
The dependable nature of the insurance industry is one reason why Sun Life can provide a portfolio with defensiveness, which is especially important during today’s volatile market conditions.
In addition, at today’s stock price, Sun Life’s dividend is yielding more than 4%.
Value stock #2: goeasy
Value investors looking to add a bit more growth to their portfolios should have goeasy (TSX: GSY) on their radar.
While shares may not be as cheap as Sun Life from a valuation perspective, the stock is trading at an absolute bargain price.
Shares are down close to 40% from all-time highs set in late 2021. Still, the stock is up more than 200% over the past five years. In comparison, the S&P/TSX Composite Index has returned just 30%.
High interest rates have understandably slowed demand for the consumer-facing financial services company. It may take time, but rates will eventually begin to decrease, making it only a matter of time before goeasy is back to trading at all-time highs.
Growth investors looking to take advantage of the 2022 selloff should act fast on this rare buying opportunity.
