Your best stock brokerage firm now offers fractional shares. This means you can invest whatever small amount you have. It’s possible that you can buy a fraction of your desired company’s stock today. However, buying a whole share remains a psychologically appealing idea. So much so that many successful companies, including tech giant Apple, repeatedly split their shares when their stock prices skyrocket beyond the average investor’s perceived affordability. With as little as $50 in your trading account, you can buy more than a whole share in cheaply valued stocks before share prices go up.
Our idea of cheap Canadian stocks isn’t based on a low share price though. Cheap stocks are identified by the value you get given their key fundamental attributes, including how much you pay per dollar of earnings and the company’s future earnings growth potential.
Therefore, a $50 stock could be far cheaper than a $10 stock. The price/earnings-to-growth (PEG) ratio comes in handy in identifying cheaply undervalued stocks.
Suncor Energy (TSX:SU) and B2Gold (TSX:BTO) are two cheap Canadian stocks you can buy for $50 on the TSX today.
Suncor Energy stock
Suncor Energy is a $52.6 billion integrated energy stock that’s dishing out massive free cash flows to its shareholders as profits pile up during the current oil price super cycle. Suncor’s stock price, at $39.54, is back to where it was just before the COVID-19 pandemic in 2020. Yet, the company is a vastly improved energy giant today than it was going into the chaotic oil market three years ago.
Oil prices are trending down in 2023, and that’s a concern for energy stocks. However, Suncor’s business model is somewhat shielded as the lower oil prices that hurt its oil production assets also mean lower input costs for its oil refinery operations. The business should remain profitable, as long as the oil market doesn’t hit the negative prices seen in 2020 – a rare phenomenon that may not happen again during our lifetimes.
Most noteworthy, the company has significantly reduced its share count during the great oil boom of 2022. Suncor had nearly 1.5 billion common shares outstanding then. Now, it has 13% fewer shares after significant stock repurchases in 2022. The company has a much lower net-debt position and a stronger balance sheet. SU stock pays a quarterly dividend (of $0.52 per share), which is 10.6% higher than it was at the beginning of 2020. The current dividend should yield 5.3% annually.
Suncor stock trades cheaply today, and shares appear undervalued. Shares trade at a forward price to earnings (PE) multiple of 5.9 times. Bay Street analysts expect Suncor to generate decent five-year earnings per share growth rate of 9.4% annually. A low forward price-earnings to growth (PEG) ratio of 0.6 implies Suncor stock is potentially undervalued given its earnings growth potential.
B2Gold stock
B2Gold is a cheap gold stock to buy in 2023. The company is a low-cost gold producer with operations in Africa and the Philippines. The gold miner could commence its first production in Nunavut, Canada, by 2025 after the acquisition of Sabina Gold & Silver Corp assets – a move that adds a high-grade asset in a low-risk mining jurisdiction to B2Gold’s asset portfolio.
BTO stock traded at $5.01 per share at the time of writing. Following a 13% gain during the past month, shares remain cheap given the company’s productivity growth and stronger gold prices. Gold prices have increased by nearly 9% year to date as traders flee to safety as U.S. bank stocks crater.
The company produced a record volume of gold ounces during the fourth quarter of 2022 and celebrated its seventh consecutive year of meeting or exceeding its annual production guidance. Gold production was 1,027,874 ounces for 2022 at total all-in-sustaining costs of US$1,033 per ounce.
Management expects production of between 1,000,000 and 1,080,000 ounces in 2023. Productivity could increase this year as Namibia operations scale up. Although all-in-sustaining costs may rise again this year, the company should remain highly profitable as gold prices inch toward the US$2,000 mark this quarter.
B2Gold stock pays a US$0.04 per share quarterly dividend that should yield 4.3% annually – one of the highest reliable dividend yields in the gold mining industry. Shares trade at a forward price-to-earnings (PE) multiple of 11.6 and a low PEG ratio of 0.7, which implies BTO stock is potentially undervalued.
