Several equity indices entered the bear market territory in 2022, and growth stocks across multiple sectors led this decline. Stock market volatility is frowned upon by most investors, but it also allows you the opportunity to identify quality stocks at attractive valuations.
If you have $500 right now, here are the three best TSX stocks you can buy today. Each of these TSX stocks is trading at an enticing multiple, making them attractive to both income and value investors.
Hammond Power Solutions stock
Hammond Power Solutions (TSX:HPS.A) designs, manufactures, and sells electrical-engineered magnetics, liquid-filled transformers, standard electrical dry types, cast resins, and wound magnetic products for electrical and electronic industries.
Valued at less than one times forward sales, Hammond Power Solutions is forecast to increase its top line by almost 50% year over year to $568 million in 2022. Its adjusted earnings are also on track to more than double to $3.02 per share.
Hammond Power is optimistic about long-term demand and recently announced its intention to increase capital expenditures by $40 million in the next two years. These planned expenditures are likely to increase sales by $180 million.
HPS is also planning to set up an 80,000-square-foot small products facility while adding equipment to existing facilities.
Hammond Power stock offers investors a dividend yield of 1.5%. In the last 10 years, its dividend payouts have increased by 7.2% annually. Since March 2003, the TSX stock has surged by 285% after accounting for dividends. It’s also trading at a discount of almost 35%, given consensus price target estimates.
An undervalued TSX stock that offers investors a dividend yield of 4.5%, Cascades (TSX:CAS), is priced at 0.3 times forward sales and 14.5 times forward earnings.
Analysts expect the company to increase adjusted earnings at an annual rate of 37%, suggesting the cheap TSX stock has massive upside potential. In addition to capital gains, investors can benefit from a juicy dividend yield in 2023.
Cascades has allocated $325 million towards capital expenditures in 2023, which should increase cash flows and dividends in the future.
The final TSX stock on this list is Enerflex (TSX:EFX), an energy company with a dividend yield of 1.1%. It designs, manufactures, and provides after-sales support for equipment, systems, and turnkey facilities to process and transport natural gas from oil wells to pipelines.
Operating as an energy infrastructure company, Enerflex has a diversified portfolio of solutions. It generates revenue through a mix of product sales and after-market activity, which is recurring in nature.
Its assets include a global fleet of gas compression and processing applications leased to customers. The company deploys free cash flow towards strategic acquisitions, reinvesting for growth, and reducing balance sheet debt. Enerflex has spent $1.2 billion in capital expenditures in the last 10 years.
Priced at six times forward earnings, Enerflex stock is forecast to improve adjusted earnings to $1.64 per share in 2024, compared to a loss of $1.04 per share in 2022. Analysts tracking EFX stock expect it to gain at least 30% in the next 12 months.