Got $500? 3 Best TSX Stocks to Buy Right Now

Here’s why value investors can buy cheap TSX stocks such as Enerflex right now and benefit from outsized gains in 2023.

| More on:
data analyze research

Image source: Getty Images

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.

Cascades stock

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.

Enerflex stock

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.

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 Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hammond Power Solutions. The Motley Fool recommends Enerflex. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

How to Build a Bulletproof Monthly Passive-Income Portfolio With Just $10,000

Here’s how to build a diversified portfolio with dividend stocks that, as a group, pay out in every month of…

Read more »

A plant grows from coins.
Dividend Stocks

Invest $10,000 in 2 TSX Stocks for $606/Year in Passive Income

Shares of these two fundamentally strong companies can start a worry-free passive income stream.

Read more »

dividends grow over time
Dividend Stocks

2 Top Dividend Stocks That Keep Raising Their Payouts

In addition to their solid dividend growth track record, these top dividend stocks also offer strong growth potential for the…

Read more »

Canadian Dollars
Dividend Stocks

Buy 500 Shares of This Super Dividend Stock for $1,830/Year in Passive Income

This super dividend stock offers high yield and visibility over earnings growth. It can help you earn $1,830 in passive…

Read more »

View of high rise corporate buildings in the financial district of Toronto, Canada
Dividend Stocks

1 Magnificent TSX Dividend Stock Down 13% to Buy and Hold Forever

This dividend stock is down 13% as of writing, marking a significant opportunity for those seeking out income and value…

Read more »

Increasing yield
Dividend Stocks

Passive Income: The Investment Needed to Yield $10,000 Per Annum

Here's the math on how much you would need to invest to achieve $10,000 a year in passive income.

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

Got $3,000? 3 Dividend Stocks to Buy and Hold for the Long Term

These TSX dividend stocks look cheap today.

Read more »

Technology
Dividend Stocks

10 Years From Now, You’ll Be Glad You Bought These Magnificent TSX Dividend Stocks

The TSX is lucrative to buy these magnificent dividend stocks in bulk and be proud of this decision 10 years…

Read more »